KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

ACADEMIC YEAR 2022/2023

OCTOBER EXAMINATION

BBMF3073 RISK MANAGEMENT

TUESDAY, 25 OCTOBER 2022 TIME: 9.00 AM – 12.00 NOON

(3 HOURS)

BACHELOR OF BUSINESS ADMINISTRATION (HONOURS)

BACHELOR OF CORPORATE ADMINISTRATION (HONOURS)

BACHELOR OF ECONOMICS (HONOURS)

BACHELOR OF FINANCE (HONOURS)

BACHELOR OF FINANCE AND INVESTMENT (HONOURS)

BACHELOR OF BUSINESS (HONOURS) ACCOUNTING AND FINANCE

Instructions to Candidates:

This paper is divided into two sections, and you are required to answer ALL FOUR (4) questions as
follows:

Section A: This ONE (1) question is compulsory and must be attempted. (40 marks)

Section B: Answer ALL THREE (3) questions. (60 marks)

Marks will be awarded for clarity in presentation and logical arguments.

You are required to continue with a new page when answering new questions or parts of the
questions.

This question paper consists of 4 questions on 3 printed pages.

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BBMF3073 RISK MANAGEMENT

SECTION A (40 marks)

This ONE (1) question is compulsory and must be attempted.

Question 1

After completing your college degree, you have accepted an exciting new job with Cope Portal Sdn.
Bhd. This new position will involve a great deal of travel and some other challenging responsibilities.
Part of your job is explaining enterprise risk management to your Chief Executive Officer (CEO).
Cope Portal Sdn. Bhd. is a medium-sized producer of pineapple beverage products which has
plantations in Peninsular Malaysia and the state of Sarawak, East Malaysia. Until now, the company
has confined its operations to the Malaysian market only; the CEO wants to expand into the overseas
markets such as Australia and New Zealand. However, the Chief Finance officer mentioned that the
company should develop the Thailand market first instead of the Australia or New Zealand markets
due to the cultural issues and exchange rates issues.

In September 20X2, the company exercised an exclusive right granted by the government of Australia
to export and sell the products in Australia with the sole condition that the company must obtain the
ISO9000 process certification in 5 years after exercising the exclusive right to operate. There have
been several ambitious plans by investors from China to set up the manufacturing of pineapple
beverage products in Australia; however, they have been temporarily on hold due to funding issues.

The management of Cope Portal Sdn. Bhd is planning to apply for a recognised ISO9000 in 20X7.
This will require a factory audit, including the review of the safety process of the products and
evidence that activities are performed in accordance with documented procedures. The ISO9000
certification is valid for five years and will be issued if no significant non-conformities have been
found.

The CEO is confident that the company can handle the extra business volume with its existing
facilities. Still, he is unsure about managing the risk of selling its products to Australia due to the
exchange rate risk. However, the CEO is enthusiastic about the plan. Still, he is worried about the
implications of the overseas expansion on the firm’s risk management process and is open to
partnership with Australian counterparts.

Required:

The CEO has asked you, the firm’s most recently hired risk manager, to help him in the following
areas:

(a) Discuss the FIVE (5) common risks that the organisation will need to face when penetrating
the Australia and New Zealand markets. (20 marks)

(b) Explain how to apply the risk management process in managing the operational risks of the
Cope Portal Sdn. Bhd., particularly in a dynamic business environment. (20 marks)
[Total: 40 marks]

This question paper consists of 4 questions on 3 printed pages.

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BBMF3073 RISK MANAGEMENT

SECTION B (60 marks)

Answer ALL THREE (3) questions.

Question 2

Menara Kuala Lumpur Tower is the tallest telecommunications tower in Southeast Asia and the
seventh-tallest in the world. It boasts many facilities such as the Sky Deck, Sky Box, Sky Café,
Observation Deck, and Revolving Restaurant (Atmosphere 360°).

As a Menara Kuala Lumpur Tower risk manager, explain the FIVE (5) critical risks associated with
the building. [Total: 20 marks]

Question 3

Mobile payments are at an early stage of development in Malaysia but are gaining traction amid the
entry of new non-bank players. Although mobile payments are still at a nascent stage of growth in
Malaysia, it is expected to gather momentum. Consequently, the landscape for mobile payments is
likely to continue its rapid evolution.

Discuss the FIVE (5) common risks associated with payments via mobile phones in Malaysia.
[Total: 20 marks]

Question 4

Derivatives are securities whose price is derived from one or more underlying assets. The most
commonly found derivatives are futures contracts, forward contracts, options and swaps. Banks and
firms use derivatives to decrease their financial distress and for hedging purposes.

Evaluate the FIVE (5) risks that will be encountered when dealing in the Financial Derivatives
Market in Malaysia. [Total: 20 marks]

This question paper consists of 4 questions on 3 printed pages.