You are a risk manager in a globally recognised footwear manufacturer that has a strong brand image and excellent reputation for technical innovation. The companys management decision-making is dominated by the ageing founder and CEO.

Your company has a long established contract with an overseas Indonesian rubber supplier whose raw materials are needed in all your products.

Recent news reports indicate that the supplier is almost certain to become bankrupt due to the effect of extreme weather events, excessive borrowing, and because demand for rubber is decreasing globally as consumers demand more sustainable alternatives. Therefore, the continued regular supply of rubber and its price, have become uncertain.

Answer ALL of the following parts to this question in your own words.

1. The CEO proposes to lend money to the supplier to help continue their operation. Discuss the risks associated with the proposed strategy.
2. Explain how cognitive biases may influence decision-making of this company.
3. Describe how the COSO strategic risk management framework can be applied to this company to help it manage strategic risk.
4. Suggest what other strategies options could be considered and how they could be evaluated.