,RSK2602 Assignment 1 (COMPLETE ANSWERS)
Semester 2 2025 - DUE 20 August 2025; 100%
TRUSTED Complete, trusted solutions and
explanations.
Question 1 – True/False
1.1 True – Operational failures caused by staff are driven by
error, fraud, and data theft.
1.2 False – Technology and systems are usually considered
internal drivers of operational risk, not external. External
drivers include events outside the organization such as natural
disasters, regulatory changes, or market conditions.
1.3 False – Operational risk is the risk of loss arising from
human error, management failure, fraud, or shortcomings in
systems or controls. Strategic and reputational risk are
separate categories of risk.
1.4 True – Risk-indifferent means the organization does not
seek to change the risk/reward balance and is usually not
proactive in taking risks to enhance business outcomes.
1.5 True – Self-insurance can be achieved by way of captives,
where the organization sets up its own insurance mechanism
instead of transferring the risk to external insurers.
, 1.6 False – Risk appetite is not the financial amount the
organization is unwilling to lose. It is the amount and type of
risk an organization is willing to take to achieve its objectives.
1.7 True – The impact of risk exposures can be rated as
probable, possible, and remote.
1.8 False – Risk transfer does not involve the physical transfer
of risk; it entails transferring financial consequences of the risk
to a third party, typically via insurance or outsourcing.
1.9 False – The top-down approach primarily involves top
management in setting risk policies, but implementation often
involves other layers in the organization.
1.10 True – Value-at-risk (VaR) is used to estimate potential
losses in a portfolio under extreme or adverse market
conditions.
Question 2 – Risk Appetite
Definition:
Risk appetite is the amount and type of risk an organization is
willing to take in order to achieve its objectives. It reflects the
organization's attitude toward risk and guides decision-
making.
Four principles to consider when determining risk appetite:
Semester 2 2025 - DUE 20 August 2025; 100%
TRUSTED Complete, trusted solutions and
explanations.
Question 1 – True/False
1.1 True – Operational failures caused by staff are driven by
error, fraud, and data theft.
1.2 False – Technology and systems are usually considered
internal drivers of operational risk, not external. External
drivers include events outside the organization such as natural
disasters, regulatory changes, or market conditions.
1.3 False – Operational risk is the risk of loss arising from
human error, management failure, fraud, or shortcomings in
systems or controls. Strategic and reputational risk are
separate categories of risk.
1.4 True – Risk-indifferent means the organization does not
seek to change the risk/reward balance and is usually not
proactive in taking risks to enhance business outcomes.
1.5 True – Self-insurance can be achieved by way of captives,
where the organization sets up its own insurance mechanism
instead of transferring the risk to external insurers.
, 1.6 False – Risk appetite is not the financial amount the
organization is unwilling to lose. It is the amount and type of
risk an organization is willing to take to achieve its objectives.
1.7 True – The impact of risk exposures can be rated as
probable, possible, and remote.
1.8 False – Risk transfer does not involve the physical transfer
of risk; it entails transferring financial consequences of the risk
to a third party, typically via insurance or outsourcing.
1.9 False – The top-down approach primarily involves top
management in setting risk policies, but implementation often
involves other layers in the organization.
1.10 True – Value-at-risk (VaR) is used to estimate potential
losses in a portfolio under extreme or adverse market
conditions.
Question 2 – Risk Appetite
Definition:
Risk appetite is the amount and type of risk an organization is
willing to take in order to achieve its objectives. It reflects the
organization's attitude toward risk and guides decision-
making.
Four principles to consider when determining risk appetite:
