RSK2602 Assignment 1 (COMPLETE ANSWERS) Semester 2 2025 - DUE 20 August 2025

RSK2602 Assignment 1 (COMPLETE ANSWERS) Semester 2 2025 - DUE 20 August 2025 1.1 Operational failures caused by staff are driven by error, fraud and data theft. True/False 1.2 Technology and systems are examples of external drivers of operational risk management. True/False 1.3 Operational risk is the risk of loss arising from human error, management failure and fraud or shortcomings in systems or controls. This would include strategic and reputational risk. True/False Downloaded by Phuluso Mukwevh () lOMoARcPSD| RSK2602/02/2025 3 1.4 Risk-indifferent requires no changes in the risk/reward balance in return for an increase in risk. This attitude is usually not conducive for taking any risks to enhance the business. True/False 1.5 Self-insurance can be achieved by way of captives. True/False 1.6 Risk appetite is the financial amount that the organisation is not prepared to loose. True/False 1.7 The impact of risk exposures can be rated as probably, possible and remote. True/False 1.8 Risk transfer entails the physical transfer of the risk to a third party. True/False Downloaded by Phuluso Mukwevh () lOMoARcPSD| 4 1.9 The top-down approach to risk management involves only the top management of an organisation. True/False 1.10 Value-at-risk is used to determine how portfolios might behave under certain extreme conditions. True/False (20) Question 2 Explain briefly what is meant by risk appetite and highlight four principles that could be considered in determining the risk appetite for an organisation. (10) Downloaded by Phuluso Mukwevh () lOMoARcPSD| RSK2602/02/2025 5 Question 3 List and explain the cost components that comprise the overall cost of risk for a business organisation. (10)