, RSK4802 Assignment 1 (COMPLETE ANSWERS) Semester 1 2025 - DUE 29 May
2025;100% CORRECT AND TRUSTED SOLUTIONS
1) Identify 4 keys risks that the bank may face as a result of its non-compliance with the
statutes as detailed in the article (8 marks).
a) Regulatory Risk
Capitec Bank faces significant regulatory risk as a result of its non-
compliance with the Financial Intelligence Centre Act (FIC Act).
Regulatory risk refers to the threat of legal or regulatory sanctions,
financial losses, or reputational damage a bank may suffer as a result of
its failure to comply with laws, regulations, or prescribed practices. In
this case, the administrative sanctions imposed by the Prudential
Authority (PA), including financial penalties, cautions, and a reprimand,
demonstrate the consequences of such non-compliance. Future
inspections could result in even harsher penalties, restrictions on
operations, or even criminal investigations if compliance failures
persist. The bank could also be subjected to increased regulatory
scrutiny and ongoing monitoring, requiring it to invest more resources
into compliance efforts.
b) Reputational Risk
The reputational damage resulting from the public disclosure of Capitec
Bank’s non-compliance is another serious risk. Reputational risk arises
when negative publicity regarding an institution’s business practices
affects its customer base, investor confidence, and broader stakeholder
trust. Clients and investors may perceive the bank as careless,
unethical, or risky, which could lead to loss of business, decreased
customer loyalty, difficulty in attracting new customers, and a lower
market valuation. For a retail-focused institution like Capitec, which
relies heavily on consumer trust, reputational harm can have long-term
financial consequences, impacting both its customer retention rates
and future growth prospects.
2025;100% CORRECT AND TRUSTED SOLUTIONS
1) Identify 4 keys risks that the bank may face as a result of its non-compliance with the
statutes as detailed in the article (8 marks).
a) Regulatory Risk
Capitec Bank faces significant regulatory risk as a result of its non-
compliance with the Financial Intelligence Centre Act (FIC Act).
Regulatory risk refers to the threat of legal or regulatory sanctions,
financial losses, or reputational damage a bank may suffer as a result of
its failure to comply with laws, regulations, or prescribed practices. In
this case, the administrative sanctions imposed by the Prudential
Authority (PA), including financial penalties, cautions, and a reprimand,
demonstrate the consequences of such non-compliance. Future
inspections could result in even harsher penalties, restrictions on
operations, or even criminal investigations if compliance failures
persist. The bank could also be subjected to increased regulatory
scrutiny and ongoing monitoring, requiring it to invest more resources
into compliance efforts.
b) Reputational Risk
The reputational damage resulting from the public disclosure of Capitec
Bank’s non-compliance is another serious risk. Reputational risk arises
when negative publicity regarding an institution’s business practices
affects its customer base, investor confidence, and broader stakeholder
trust. Clients and investors may perceive the bank as careless,
unethical, or risky, which could lead to loss of business, decreased
customer loyalty, difficulty in attracting new customers, and a lower
market valuation. For a retail-focused institution like Capitec, which
relies heavily on consumer trust, reputational harm can have long-term
financial consequences, impacting both its customer retention rates
and future growth prospects.
