ACCTNG320 Chapter Exam:

Coverage: Chapter 1 (The Nature of Risk) & Chapter 2 (Risk Management: A Powerful Tool)

Essay: Answer the following questions briefly. (10pts)

1. In your own words, how to you define risk? (10pts)

2. Do you consider yourself a risk taker or one who avoids taking risk? Why? (10pts)

3. What is your biggest risk exposure so far? How did it help you grow as an individual? (10pts)

4. There is a saying that goes, “No risk, no gain. No pain, no gain”. What can you say about this
proverbial old saying? Do you agree? Why or why not? (10pts)

5. Do you think taking risks are an essential part of our lives? Why or why not? (10pts)

6. Make a research of one famous person who took the risk and become successful. Answer the
following sub-questions below: (20pts)

6.1 Provide a summary of his success story and the struggles he had to face before reaching success.

6.2 How did the story affect you personally?

6.3 What is the moral of the person’s story on risk?

7. One of your classmates approached you and told you that he has a problem – his monthly allowance,
normally sent from the province by his parents has been delayed.

He asked you if he can borrow an amount from you (which you will get from current allowance) and pay
you back once he receives his allowance. He promised that it will not take long before he can pay you
back.

Should you decide to lend him the amount he is asking, what are the typical risks that you are exposing
yourself to as are occasioned by you accommodating his request? (40pts)

Category of Risk Implications

Financial Risk • What if your classmate failed to pay you back as the monthly allowance
promised still did not arrive?
• How can you mitigate or treat this risk?
Operational Risk • With the failure of your classmate to pay you back, definitely, your
expenditures for food and other needs will also be affected. How do you
treat/mitigate this situation?
Reputational Risk • It is very common that those who failed to pay back a debt will try to
avoid contact with their debtor. In the process, relationship suffers and
sometimes, it turned sour or unhealthy. Having read the different
principles and concepts in this chapter, which one will apply to this
particular situation?

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