| Course | BU 531 Strategic and Risk Management for Business Success |
|---|---|
| Unit | Unit 7 |
| Paper type | Governance and oversight |
| Length | About 870 words, 6 pages |
| Format | APA 7 student paper |
| School | Herzing University |
| Program | MBA |
| Updated | October 2026 |
Free sample paper for BU 531 Unit 7
Who Watches the Covenant, the Dust and the Contracts: Governance and Oversight Arrangements for a Composite Northern Michigan Pellet Producer's Material Exposures
Student Name
Business, Herzing University
BU 531: Strategic and Risk Management for Business Success
Instructor Name
April 13, 2026
Who Watches the Covenant, the Dust and the Contracts: Governance and Oversight Arrangements for a Composite Northern Michigan Pellet Producer's Material Exposures
The Design Problem
The composite pellet producer is a private, family-owned firm with 64 employees. It has a board of five, including two independent directors, a chief executive who is also an owner, a chief financial officer, an operations manager and, if the board approves Option B, a new commercial account manager. It has no internal audit function and cannot justify one. The question this paper answers is who watches each material exposure, how often, what triggers escalation and who may slow, pause or reverse a commitment once made. Everyone is identified by position.
No listed-company governance code applies to a private firm of this size. The design therefore draws on the governance and culture component of the COSO framework (Committee of Sponsoring Organizations of the Treadway Commission [COSO], 2017) and on the three lines model (Institute of Internal Auditors [IIA], 2020), adapted to a firm too small to staff all three lines. Mikes and Kaplan (2015) argue that effective risk management varies with a firm's circumstances, which is a warning against copying the committee structures of large companies into a firm of 64 people.
Exposures, Owners and Reviewers
| Material exposure | Owning role | Reviewing body | Reaches the full board when |
|---|---|---|---|
| Debt ratio and liquidity | Chief financial officer | Finance and risk committee | Debt ratio at 2.3 times or undrawn line below $2.0 million |
| Feedstock concentration and cost | Operations manager | Finance and risk committee | Any supplier above 28% of tons or residue cost up 15% on the spring price |
| Mill fire and dust safety | Operations manager | Plant safety committee, then the board | Any incident at all, and any impairment lasting more than one shift |
| Customer concentration | Chief executive | Finance and risk committee | Any customer above 18% of revenue or a chain signaling a supplier review |
| Option B contract performance | Commercial account manager | Chief executive, then finance and risk committee | Delivery fill rate below 98% or contracted tons more than 20% behind plan |
| Scenario indicators from Unit 5 | Chief financial officer | Finance and risk committee | Two indicators pointing to the same adverse future |
Reporting Intervals Matched to Speed
Exposures move at different speeds, so they are reported on different calendars. Debt ratio and liquidity move fast in winter, when inventory is being sold and the revolving line paid down, so the chief financial officer reports them monthly from October to March and quarterly the rest of the year. Heating degree days are reported weekly from November to February, because they are the earliest signal of a mild winter. Feedstock cost moves mainly at the spring pricing round, so it is reported monthly from March to May and quarterly otherwise. Safety is reported at every plant safety committee meeting, weekly, and at every board meeting. Customer concentration changes slowly and is reported quarterly. The scenario indicators are reviewed twice a year, in May and November, when the firm makes its feedstock and inventory commitments for the coming season.
Decision Rights
The arrangements state who may slow, pause or reverse a commitment, and up to what value.
The operations manager
May stop any production line for safety at any time, without approval, and no one in the firm may override that decision. This right is unconditional because the appetite statement sets zero tolerance for operating with an impaired system.
The chief executive
May pause the second stage of Option B purchases, worth up to $1 million, and may decline new institutional contracts that do not meet the standard terms, reporting either decision to the committee chair within a week.
The finance and risk committee
May defer Option B's second stage indefinitely, approve temporary breaches of appetite limits for up to one quarter, and require the chief executive to present a recovery plan.
The full board
Alone may terminate institutional contracts early, approve any commitment above the new-venture limit, approve a covenant reset or new borrowing, and reverse the strategy as a whole.
Independence
The person who runs a strategy should not be the only person reporting on its risks. Here the chief executive is both an owner and the champion of Option B. To keep reporting independent, the chief financial officer sends the risk report directly to the chair of the finance and risk committee, an independent director, before the chief executive reviews it, and meets the committee without the chief executive once a year. In the language of the three lines model, operations and commercial managers are the first line, owning risks in their daily work; the chief financial officer's monitoring is the second line. A third line of independent assurance is not affordable as a department, so the firm will engage its outside accounting firm each year to test whether the key indicators in the risk report are calculated correctly from source records, at an estimated $15,000.
How the Arrangements Will Be Tested
Arrangements on paper can fail quietly, so the board will test them once a year. In the autumn, before the heating season, the finance and risk committee will walk through one exposure from start to finish: for example, how a supplier's curtailment notice would travel from the operations manager to the committee, and how long it would take. The committee chair will also check that every escalation in the past year reached the right body on time, using the dates in the risk reports. Where an escalation was late or skipped, the cause goes into the next year's design, not into a reprimand.
What the Design Leaves Out
No committees are added beyond the plant safety committee the firm already has and the finance and risk committee, which replaces the board's existing audit agenda item. Nor is the board asked to read every indicator; most reach the board only when they cross a threshold. A small board that receives a 40-page risk pack every quarter will stop reading it. Power (2009) warns that risk processes can become a way of producing comfort rather than oversight, and the design is deliberately sparse so that what reaches the board is something it must act on.
References
Committee of Sponsoring Organizations of the Treadway Commission. (2017). Enterprise risk management: Integrating with strategy and performance. COSO.
Institute of Internal Auditors. (2020). The IIA's three lines model: An update of the three lines of defense. Institute of Internal Auditors.
Mikes, A., & Kaplan, R. S. (2015). When one size doesn't fit all: Evolving directions in the research and practice of enterprise risk management. Journal of Applied Corporate Finance, 27(1), 37-40. https://doi.org/10.1111/jacf.12102
Power, M. (2009). The risk management of nothing. Accounting, Organizations and Society, 34(6-7), 849-855. https://doi.org/10.1016/j.aos.2009.06.001
The Herzing BU 531 Unit 7 instructions
The seventh BU 531 unit asks students to design governance and oversight for the exposures their firm is taking on. Requirements typically include mapping each material exposure to an owning role, a reviewing body and the level at which it reaches the board, setting reporting intervals matched to how fast each exposure moves, attaching indicators and escalation thresholds, stating decision rights to slow, pause or reverse commitments and addressing independence. Everyone appears by position, not name. For a private firm, a framework such as COSO or the three lines model is more useful than a listed-company code. Strong designs also say how the arrangements will be tested. Copying your employer's committee structure and reporting lines would disclose internal arrangements.
Inside the BU 531 Unit 7 example
A design problem section opens the sample, describing the firm's small board, roles and lack of internal audit, with COSO, the three lines model and Mikes and Kaplan setting the approach. A mapping table assigns six exposures to owners, reviewing bodies and board thresholds drawn from the appetite statement. A section on intervals explains why each exposure is reported on its own calendar. Decision rights appear under run-in headings for the operations manager, chief executive, committee and board. An independence section separates reporting from championing the strategy and adds outside testing of indicators. A testing section and a closing section on what the design deliberately avoids complete it.
Where the points sit in the BU 531 Unit 7 rubric
Herzing's rubric for governance and oversight typically rewards complete exposure mapping, intervals matched to speed, indicators with thresholds, explicit decision rights, attention to independence and proportion to the firm's size. Mapping earns credit when every material exposure has an owner, a reviewer and a board threshold. Intervals score when they differ by exposure for stated reasons. Indicators earn points when thresholds link to the appetite statement. Decision rights are often the most heavily weighted criterion, rewarding clear statements of who may pause or reverse what. Independence scores when the person running the strategy is not its only reporter. Proportion is credited when the design fits a firm of this size, adding no committees it cannot staff.
BU 531 Unit 7 help before you submit
Governance papers lose marks when they describe committees without saying what each one decides. Another frequent weakness is a single reporting calendar for every exposure, so fast-moving risks are seen too late. Writers often omit decision rights, leaving unclear who can stop a commitment already made. Some ignore independence, letting the strategy's champion report on its risks. Others copy large-company structures into a small firm, creating paperwork without oversight. Reproducing a real employer's reporting lines is a confidentiality problem. Designs that are never tested, for example by walking one escalation through from start to finish, tend to fail quietly. If your design feels too heavy or too vague, our writers can help you fit it to your own firm's size and exposures.
Get a BU 531 Unit 7 example written to your instructions
Forward the Unit 7 instructions with the rubric your BU 531 classroom posts, plus any governance code or committee structure the assignment specifies. We write a custom example that maps exposures to accountable roles, matches intervals to how fast each one moves, sets escalation thresholds and states the authority to stop. First custom sample free, back in 24 to 48 hours.
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BU 531 Unit 7 questions, answered
Is this the same as the obligations memo in a leadership course?
No, and confusing the two costs marks. An obligations memo argues what a firm owes its owners, employees, customers and communities. This deliverable is mechanical: who watches which exposure, how often they look, what number makes them speak up, and who can halt a commitment. Duties may appear as context, but the paper is judged on whether the watching arrangement would actually function.
Which governance code should I cite?
Whichever your instructions point to, cited with its year, and described as applying to a particular kind of entity in a particular jurisdiction. Requirements differ between listed and private companies, between countries, and between editions of the same code, so a sentence claiming that boards must do something is usually wrong somewhere. Attribute what you cite and treat it as something to verify rather than as current fact.
Can I copy our committee structure and audit reporting lines?
Not from the documents. Committee charters, terms of reference, internal audit reports and the minutes recording what a committee decided are confidential to that organization, and anything said in a real board meeting is never written down for a classroom. Design the arrangement for the composite firm, using your working knowledge of how such structures behave, and keep every role generic.
Where can I find a free BU 531 Unit 7 sample paper?
Nothing in the BU 531 Unit 7 governance and oversight design is held back; read it free above, with the exposure map, reporting intervals, decision rights and margin notes. Designing for another firm? Share the assignment and earlier units and a matching design is drafted free, often within two days.
Which governance code should BU 531 Unit 7 cite?
For a private firm, listed-company codes rarely apply. The sample draws on the COSO framework's governance component and the three lines model, adapted to a firm without internal audit.