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Formative Assessment

Module 5

Risk Management

Assignment No. MAN61FMod5-1

Student Number: - 1

RISK MANAGEMENT

Learner Full Names:

Surname:

Only fill in your answers in the provided columns on the right hand side of the page.

Question 1: Multiple Choice - Only write the BEST CORRECT corresponding answer in the space provided for “Your Answers”. (i.e. either a, b, c, or d )

Nr: Statement or question: Ma rk

Your

Answers

1.1 In risk management, uncertainties may include: 2 D

a Events which may or may not happen

b Uncertainties caused by a lack of information

c Uncertainties caused by ambiguity

d All of the above

1.2 The unexpected variability or volatility of returns is known as: 2 B

a Information security risk

b Financial risk

c Human relationship risks

d Marketing risk

1.3 The characteristics of a Level 3 uncertainty (total uncertainty) are: 2 D

a Outcomes are not fully identified and probabilities are unknown

b Outcomes can be predicted with precision

c Outcomes are identified and probabilities are known

d Outcomes are identified but probabilities are unknown

1.4 Having appropriate risk management processes in place is a function of: 2 A

a The Board

b Employees

c Management

d Directors

Question 1: Multiple Choice - Only write the BEST CORRECT corresponding answer in the space provided for “Your Answers”. (i.e. either a, b, c, or d) CONTINUED:

Nr: Statement or question: Mark Your Answers

1.5 An example of a risk management plan is: 2 A

a House insurance

b SWOT analysis

c Project failures d None of the above

1.6 A benefit of risk management is: 2 D

a Effective use of resources

b Ability to quickly grasp new opportunities

c Contingency planning

d All of the above

1.7 One of the key activities in the Risk Management Process is: 2 A

a Resource controls

b Staff meetings

c Cost allocation d Budgeting

1.8 The practice of taking measures to minimize loss is called: 2 C

a Risk avoidance

b Risk assumption

c Risk prevention

d Risk transfer

1.9 The capture of information about the organization and its operations,

2

including the company’s aims and objectives, involves: B

a Compliance risk

b Strategic risk

c Operational risk

d Security risk

1.10 A Risk Assessment form is used to: 2 D

a Show the severity of a risk

b Indicate risk probabilities

c Estimate the frequency of occurrence of a risk

d Show the organisation’s vulnerabilities and the estimated cost of recovery in the event of damage.

Question 2: Choose the CORRECT answer by selecting a or b.

Nr: Statement or question: Nr: Your Answers

A Work Breakdown Structure breaks larger tasks down into …

2.1 a. smaller tasks (activities) or 2.1 A

b. milestones

Each item in the WBS is generally assigned a unique identifier; these identifiers

2.2 can provide a structure for a hierarchical summation of costs and …

2.2

a. time B

b. resources

The following are examples of possible Threats and Opportunities in a business: B

2.3 a. Quality; Staff; Management; Price

b. Technology; Public expectations; Competitors and competitive actions

The following are examples of possible Strengths and Weaknesses in a business: B

2.4 a. Economic conditions; Expectations of stakeholders or 2.4

b. Resources ( financial, intellectual, location); Customer service; Efficiency

FMEA is a method for analysing potential …. early in the development cycle.

2.5 a. reliability problems or 2.5 A

b. risk problems

Risk can be defined in terms of frequency and severity:

2.6 … is how serious it will be if something happens.

2.6

a. Frequency or B b. Severity

A Hazard and Operability study that systematically analyses each part of a

2.7 system or activity is called ... 2.7 A a. HAZOP or

b. HAZOS

Failure Modes and Effects Analysis is a method used

2.8 a. early in the development cycle or 2.8 A

b. at the end of the development cycle

The following aspects should be covered in the risk review process:

2.9 a. Opinions of key external and internal stakeholders; Risk disclosure 2.9 A exercise; or

b. Resource controls; Planned reaction; Report and monitor performance

Which of the following are risks associated with workplace skills:

2.10 a. Financial risk; Compliance; Reputation 2.10 A b. Changing labour market conditions; changes in existing strategic

partnerships

Total question 2 /10

Question 3: Carefully read each of the following statements and state whether they are true (T) or false (F):

No Statement T/F 3.1 Two of the factors that make up risk are levels of risk and uncertainty. -True 3.2 Risk management is defined as a set of principles and processes that help minimise the negative impacts of

risks and maximise the positive impacts. - True 3.3 One of the risks faced when developing new products is problems with employee acceptance. - False 3.4 A reactive project manager tries to resolve issues when they occur. _ True 3.5 Risk spreading is when money is put aside to cover losses that might occur. - False 3.6 One method to reduce inter-group conflict is through arbitration. - True 3.7 Reputation is a risk associated with workplace skills. - True

3.8 In financial risk management, market risk is the investor’s risk of loss arising from a borrower who does not

make payments as promised. - False 3.9 Injury or harm to customers due to negligence of the company may result in a public liability claim against the com-

pany. - True 3.10 Compliance risk is the risk of direct or indirect losses arising from failed internal processes or systems. - False

3.11 An event that result in development of new infrastructure and demand management systems that cannot be

man-aged after the event, is called environmental risk. - False 3.12 According to the 3x3 risk matrix, the severity of a risk with a high probability and medium impact is medium. - False 3.13 One of the problems that could be experienced with a risk matrix is that higher qualitative ratings can be

assigned to quantitatively smaller risks by mistake. - True 3.14 One of the elements of the external environment that the SWOT analysis examines, is the human resource skills. - False 3.15 The HAZOP process is a means of solving problems rather than an identifying technique. - False 3.16 In PEST analysis, PEST is an acronym for Political, Economic, Sociological and Training factors. - True 3.17 To run an effective risk management program, one needs to be able to predict failure risk levels throughout the

life of the asset. - True 3.18 Four ways to respond to risk include tolerate, treat, transfer and terminate. - True 3.19 One of the controls that can be put in place to mitigate risk, is additional information. – True 3.20 In an insurance context, pure risk refers to the uncertainty as to whether a voluntary undertaken activity will result

in a gain or loss. - False