RSK4803
EXAM PACK
FOR ASSISTANCE WITH THIS MODULE +27 67 171 1739
, lOMoARcPSD|62123117
Page 1 of 12 RSK4803
Jan/Feb 2025
UNIVERSITY EXAMINATIONS
January/February 2025
RSK4803
RISK FINANCING
100 marks
Duration: 3,5 hours
INSTRUCTIONS
• Please scan the QR code which is available in the enclosed document.
• This is an open-book examination.
• Use of a programmable pocket calculator is permissible.
• Start each question on a new page.
• Should you encounter any technical difficulty relating to the use of Invigilator
App, please he Invigilator Helpdesk on +27 (0)73 505 8273.
• Should you encounter any technical difficulty relating to myExams platform,
please email CEMS at
Downloaded by Pied Zulu ()
, lOMoARcPSD|62123117
Page 2 of 12 RSK4803
Jan/Feb 2025
Question 1 42 marks
1.1 Risk financing is an important element of risk … (2)
a. management.
b. the management process.
c. the management framework.
d. the control process.
1.2 Holistic risk management … (2)
a. takes advantage of internal risk hedging opportunities.
b. delivers efficient and effective risk hedging.
c. covers the identified exposures and minimise the total cost of risk.
d. achieves organisation’s objectives efficiently.
1.3 Strategic risk management means … (2)
a. delivering a strategy that allows efficient risk hedging.
b. delivering a strategy that is risk free, which maximises the value add.
c. achieving the organisation’s objectives efficiently.
d. achieving the organisation’s objectives within the stipulate time frame.
1.4 The senior underwriter reviewed the submitted insurance quotation and showed
the trainee underwriter that the R160 cost, which applies to all the 2025 insurance
quotations, was not included. The amount of R160 should be the … cost factor.(2)
a. moral hazard
b. adverse selection
c. capital
d. administration
1.5 The primary objective of minimising the cost of risk is to … (2)
a. maintain the ratio of the total cost of risk.
b. signal to investors that the company considers risks in its business decisions.
c. maximise return on investment.
d. signal to regulators that controls ensure compliance with laws and regulations.
Downloaded by Pied Zulu ()
, lOMoARcPSD|62123117
Page 3 of 12 RSK4803
Jan/Feb 2025
1.6 Company A’s assets were damaged by floods due to unmaintained storm
drainage by the city municipality. Company A successful claimed for R85 000 and
was paid R70 000 by the insurer. However, the insurer proceeded to sue the
municipality for the repayment of R85 000. Choose the correct statement below.
(2)
a. The insurer understated the payment by R15 000.
b. The payment difference of R15 000 in the claim payment is an outstanding
premium, which Company A did not pay.
c. The municipality will have to pay R15 000 to Company A if the litigation is
successful.
d. The difference of R15 000 in the claim payment is an excess.
1.7 LTA Bank purchased a new camera system at a cost of R1 500 000, excluding
VAT. The chief financial officer insured the camera system at 60% of the full cost
price to the bank to save on premium costs. The insurance policy requires an
amount of R80 000 to be paid for each claim submitted by the bank. Three years
after the camera system was purchased and insured, it was damaged by fire. The
appointed loss adjuster found that the damage amounted to R450 000. The
insurer … (2)
a. is liable for R450 000 and must pay the same to the insured.
b. is liable for R450 000 and must pay the insured the amount of R370 000.
c. is liable for R270 000 and must pay the same to the insured.
d. is liable for R270 000 and must pay the insured the amount of R190 000.
1.8 The chief underwriter declined to sign the insurance contract, arguing that the
R60 000 monthly premium amount of the contract was wrong. The chief
underwriter stated that if R60 000 premium were to be charged, then the
company would have no reason to be in business and must be a charity
organisation. The R60 000 premium amount is… (2)
a. above the present value of expected claims
b. below the present value of expected claims.
c. above the future value of expected claims
d. below the future value of expected claims.
Downloaded by Pied Zulu ()
EXAM PACK
FOR ASSISTANCE WITH THIS MODULE +27 67 171 1739
, lOMoARcPSD|62123117
Page 1 of 12 RSK4803
Jan/Feb 2025
UNIVERSITY EXAMINATIONS
January/February 2025
RSK4803
RISK FINANCING
100 marks
Duration: 3,5 hours
INSTRUCTIONS
• Please scan the QR code which is available in the enclosed document.
• This is an open-book examination.
• Use of a programmable pocket calculator is permissible.
• Start each question on a new page.
• Should you encounter any technical difficulty relating to the use of Invigilator
App, please he Invigilator Helpdesk on +27 (0)73 505 8273.
• Should you encounter any technical difficulty relating to myExams platform,
please email CEMS at
Downloaded by Pied Zulu ()
, lOMoARcPSD|62123117
Page 2 of 12 RSK4803
Jan/Feb 2025
Question 1 42 marks
1.1 Risk financing is an important element of risk … (2)
a. management.
b. the management process.
c. the management framework.
d. the control process.
1.2 Holistic risk management … (2)
a. takes advantage of internal risk hedging opportunities.
b. delivers efficient and effective risk hedging.
c. covers the identified exposures and minimise the total cost of risk.
d. achieves organisation’s objectives efficiently.
1.3 Strategic risk management means … (2)
a. delivering a strategy that allows efficient risk hedging.
b. delivering a strategy that is risk free, which maximises the value add.
c. achieving the organisation’s objectives efficiently.
d. achieving the organisation’s objectives within the stipulate time frame.
1.4 The senior underwriter reviewed the submitted insurance quotation and showed
the trainee underwriter that the R160 cost, which applies to all the 2025 insurance
quotations, was not included. The amount of R160 should be the … cost factor.(2)
a. moral hazard
b. adverse selection
c. capital
d. administration
1.5 The primary objective of minimising the cost of risk is to … (2)
a. maintain the ratio of the total cost of risk.
b. signal to investors that the company considers risks in its business decisions.
c. maximise return on investment.
d. signal to regulators that controls ensure compliance with laws and regulations.
Downloaded by Pied Zulu ()
, lOMoARcPSD|62123117
Page 3 of 12 RSK4803
Jan/Feb 2025
1.6 Company A’s assets were damaged by floods due to unmaintained storm
drainage by the city municipality. Company A successful claimed for R85 000 and
was paid R70 000 by the insurer. However, the insurer proceeded to sue the
municipality for the repayment of R85 000. Choose the correct statement below.
(2)
a. The insurer understated the payment by R15 000.
b. The payment difference of R15 000 in the claim payment is an outstanding
premium, which Company A did not pay.
c. The municipality will have to pay R15 000 to Company A if the litigation is
successful.
d. The difference of R15 000 in the claim payment is an excess.
1.7 LTA Bank purchased a new camera system at a cost of R1 500 000, excluding
VAT. The chief financial officer insured the camera system at 60% of the full cost
price to the bank to save on premium costs. The insurance policy requires an
amount of R80 000 to be paid for each claim submitted by the bank. Three years
after the camera system was purchased and insured, it was damaged by fire. The
appointed loss adjuster found that the damage amounted to R450 000. The
insurer … (2)
a. is liable for R450 000 and must pay the same to the insured.
b. is liable for R450 000 and must pay the insured the amount of R370 000.
c. is liable for R270 000 and must pay the same to the insured.
d. is liable for R270 000 and must pay the insured the amount of R190 000.
1.8 The chief underwriter declined to sign the insurance contract, arguing that the
R60 000 monthly premium amount of the contract was wrong. The chief
underwriter stated that if R60 000 premium were to be charged, then the
company would have no reason to be in business and must be a charity
organisation. The R60 000 premium amount is… (2)
a. above the present value of expected claims
b. below the present value of expected claims.
c. above the future value of expected claims
d. below the future value of expected claims.
Downloaded by Pied Zulu ()
