Q.1.1 Describe how the concept of risk is important during the business management planning process. (3) Q.1.2 Distinguish between a peril and a hazard. (Hint: Use examples where applicable) (3) Q.1.3 Differentiate between priori probabilities and subjective probabilities in risk management. (3)
Q.1.1 Describe how the concept of risk is important during the business management
planning process.
(3)
Q.1.2 Distinguish between a peril and a hazard.
(Hint: Use examples where applicable)
(3)
Q.1.3 Differentiate between priori probabilities and subjective probabilities in risk
management.
(3)
Q.1.4 Principle two of King I report states that the board of directors and managers
should ensure that through a managed and effective process, board appointments
are made that provide a mix of proficient directors, each of whom is able to add
value and to bring independent judgement to bear on the decision-making
process.
Describe how this principle is important in risk management.
(3)
Q.1.5 Differentiate between micro and macro risk. (3)
Question 2 (Marks: 25)
Q.2.1 Outline the measures used to describe possible loss accurately? (5)
Q.2.2 Effective risk management does not function in a vacuum and rarely survives a
leadership failure. The risk management function can review, inform, advise,
monitor, measure and even resign. Discuss the management principles which risk
management culture addresses.
(10)
20; 21 2021
© The Independent Institute of Education (Pty) Ltd 2021
Page 4 of 8
Q.2.3 Governance structures are the formally approved organisational risk management
structures and committees that govern operational risk management.
In light of this definition above, explain the two components of the governance
structure for operational risk.
(Note: No graphical illustration required)
(10)
Question 3 (Marks: 10)
Evaluate the concept of risk with the focus on risk management. Your answer should include an
analysis of how it has evolved from its insurance-buying origins.
Question 4 (Marks: 10)
Risk identification and risk evaluation are integral parts of the risk management process. Yet, risk
managers in the past have taken a less than holistic approach and have neglected these aspects.
Analyse this statement and highlight the importance of identification and evaluation.
Question 5 (Marks: 10)
Market failure can be defined as a scenario where the market fails to provide goods and services
(Valsamakis et al., 2016: 10).
Discuss the concept of market failure and how it is applicable in the insurance industry?
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