RSK4801 Assignment 4 (COMPLETE ANSWERS) Semester 2 2025 – DUE 3 October 2025 ; 100% correct solutions and explanations.

RSK4801 Assignment 4 (COMPLETE ANSWERS) Semester 2 2025 – DUE 3 October 2025 ; 100% correct solutions and explanations. RSK4801 ASSIGNMENT 04 FOR 2025 Instructions: - Answer both questions below. - Remember to submit your final document as a PDF on myUnisa. - Use Arial 12-point font and 1.5 line spacing to answer the questions. - Include page numbers in your document and answer the questions in the correct sequence. - All work should be referenced, including the prescribed and recommended textbook; insert a reference list at the end of your document. Please do not use Wikipedia or ChatGPT as a reference, as these are not regarded as academic sources. We will check for plagiarism. CASE STUDY: OPERATIONAL RISK REPORTING Background The purpose of a risk report is to inform a bank's stakeholders about its performance for a reporting period and address the various compliance reporting requirements. The information below regarding 2021 (one year after the COVID-19 pandemic) is provided for consideration for a risk report for the Region Bank. Reporting structure The Region Bank's reporting structure entails the following reports: • Governance report Discusses the Bank's governance approach and priorities. • Environmental, Social and Governance (ESG) report Provides an overview of the Bank's processes and governance structures relating to social and environmental matters. • Annual financial statements Entails the Bank's full audited annual financial statements. • Risk and capital management report Sets out the Bank's approach to risk management. • Climate-related financial report Provides information on how the Bank is managing the risks and responding to the opportunities presented by climate change. The Board of Directors (hereafter, Board) plays a crucial role in the management and reporting process of the Bank. For the reporting period, the Board must be satisfied that: • The Bank's risk, compliance, treasury, capital management, and internal audit processes were operating effectively. • The Bank's business activities were managed within the approved risk appetite. • The Bank is adequately funded and capitalised to support the execution of the approved strategy. • Appropriate remedial actions were taken for instances that incurred losses, led to a breach in the risk appetite or actions that incurred fines/penalties by the regulators. The Chief Risk Officer made the following general comments: A focus area during the year was operational risk management to enhance the banks performance and address the various compliance reporting requirements. The risk report was reliable in simplifying and supporting management decisions and risk data. A more robust approach was followed to enhance the level of implementation of risk management and the requirements of the code of ethics within the Bank. The environmental, social, and governance (ESG) risks and their impact on operational risk management remain a focus area. A climate policy was developed to set certain climate-related targets aligned with the government's overall approach. The Bank continues to embed a risk management culture to ensure risktaking to support the strategic objectives. The Bank remains committed to complying with the minimum regulatory requirements and operates within the internally approved risk appetite. In addition, the following information was reported for 2021 (post-COVID-19 year), which may be relevant for drafting the operational risk management report. Economic environment The continent and the world have experienced multiple COVID-19 issues, leading to inconsistent economic recovery. Severe infection rates hindered this despite high vaccination rates in some countries. While recovery continues, some central banks allowed inflation to exceed targeted ranges to promote economic growth. The increased liquidity from the COVID19 pandemic has kept debt levels high, exposing high risks to the banking sector and credit ratings. Growth continued to benefit technological businesses, while conventional businesses were slower to recover. This status is also relevant to developing countries, resulting in unrest and affecting investor confidence, emphasising the importance of risk management. Environment and Social Climate change is negatively impacting all continents, including Africa. For example, Africa faces an increased risk of floods and drought, which affect food production and health and lead to instability and illegal migrations. The COVID-19 pandemic also resulted in many social consequences, such as increased poverty, higher unemployment rates, digital inequality and unavailability of certain health support and facilities. Main enterprise risks The main enterprise risks that will have to be managed are as follows: • Climate change and extreme weather incidents. Severe extreme weather incidents will deplete resources, and the impact of drought or flooding on agriculture-reliant economies may increase the number of refugees across borders. • After-effects of the COVID-19. Post-pandemic stress on employees, customers and third parties may result in low productivity, misconduct and business closures. • Environmental, Social and Governance issues. A shortfall of dedicated resources to lead the Bank in managing ESG risks and limited customer ESG data sources results in the inability to demonstrate a commitment to sustainable financing for ESG initiatives. • Technology. Technology is one of the main risk areas for most banks, which were affected by the following: o Cyber-attacks o Ransomware attacks o Technological instability o Technological fraud o Unskilled staff Operational risks The Bank identified the following operational risks with the respective severity and frequency ratings: 1. Regulatory constraints (3;3) 2. Threats posed by emerging technology companies (4;4) 3. Psychological effects of Covid-19 (2;2) 4. Fraud via digital channels (3;3) 5. Inadequate procedures to detect internal fraud and staff defalcations (3;2) 6. Resourcing for ESG risk management (3;3) 7. Technology instability (4;3) 8. Unawareness of customers regarding digital fraud (3;4) 9. Resourcing skilled staff for risk management (4;5) 10. Operational dependence on third parties (4;2) 11. Back-to-back extreme weather events (5;3) 12. Ransomware attacks (5;5) The Bank approved the following rating scales for impact and frequency for a risk and control self-assessment: Severity 1 2 3 4 5 Insignificant Minor Moderate Major Severe Frequency 1 2 3 4 5 Rare Unlikely Likely Almost certain Certain The following risk-mitigating actions were identified for some of the operational risks: • Supporting programmes for employees to deal with post-pandemic stress. • Staff wellbeing initiatives. • Development of internal fraud detection processes and