GRADUATE INSTITUTE OF FINANCIAL SCIENCES Graduate Institute of Financial Science (GIFS) LEARNER General Portfolio Requirements - Written Questions Workbook Module 3 (Part 1 or 3.1) QCTO Risk Manager (Practi Level 6, 125 Credits Facilitator Guide ioner), and Marking Memo, Module 2: Disclaimer This General Portfolio Requirements - Written Questions Workbook is made up of a fictional case study and other questions relating to the QCTO Risk Manager Qualification and is to be completed in addition to those question indicate in the Assessment Guide. Its related questions are based on facts of the insurance industry. All sources and references were checked at the time of going to print. The author of this Workbook cannot be held liable for the changing of sources and holds copywrite of all work covered, 1Noe y/2> cRapuare instiTuTE Contents Introduction and Instructions on how to go about completing this Workbook... 3 Introduction .. 8 Instructions on how to complete the Written Question Workbook 3 Fake News and Information - Checking your facts when doing research. wn. 3 How this Workbooks Speaks to your Qualification 5 Slide / Facilitation Exercises 9 PART A... a) SUBMISSION REQUIREMENT KN 3.01 — KN 3.15 (All are Compulsory) 9 Learning Unit 1: KM-03-KTO1: Communicating and Consultation... a) Learning Unit 2: KM-03-KT-02...0nnnniinnnnnnnnnnnnnnnnsinnnnnnnnnnnneee DS Practical Module No 1. 26 PART Bono 26 SUBMISSION REQUIREMENT KN 3.16 ~ KN 3.21 (All are Compulsory}. 26 Index of Figures Figure 1: Top Tips for navigating the infodemic.Introduction and Instructions on how to go about completing this Workbook. Introduction You have been presented with this Written Question Workbook as part of your training, learning and development at GIFS. The prime responsibility of this book is to draw your attention to important facts and relevant issues that tie into your level QCTO Risk Management Qualification, as well as to tie in existing product that you are working in the workplace, ‘The workbook takes the form of a fictional written questions based on the Knowledge component of Module 3 of the above qualification. Instructions on how to complete the Written Question Workbook In this workbook, you are presented with. 1. The reflection and other exercises found in the Slides to the module. 2. The Main Qualification and Modular Reflection Exercise required for completion as part of POE requirement. 3. Practical Exercises and other Requirements for the Qualification, ‘This Written Questions Workbook is for assessment, and you are required to achieve a competency rating of 70% for each discussion topics. The Reflection exercise will not be graded, but if itis not completely completed, then you shall not be awarded the competency that you require to move forward to the next assessment and module. ‘There may be additional articles and additional reading have been linked to each discussion topic or written question and you are required to go through these to gain the insight required to answer the questions and then participate in the discussions that follow. Failure to read and attempting to guess ‘the answers will result in you not been deemed competent, Fake News and Information - Checking your facts when doing research. ‘Technology is a major tool for the dissemination of fake news and information. According to Janine Geldenhuys (2021), the World Health Organisation (WHO) has taken steps to prevent an “infodemic”an overabundance of information and rapid spread of misleading or fabricated news, images, and videos. “It helps to think of misinformation and disinformation spreading in the same way as viruses. One person might share fake news with thelr friends and family, and then a handful of them share it with more of their friends and family, and before you know it, potentially harmful or dangerous information is taking over everyone’s newsfeed,” according to WHO. ‘The WHO published 7 tips for stopping the spread of misinformation, tips not just relevant to the pandemic, but can also be used in general: Source: Geldenhuys J (2021). Don’t be led by vour nose ~ check the facts Moonstone. https://www.who.inl/news-room/spotlight, Accessed 14 January 2021 15.06 pm Top tips for navigating the infodemic @zet antennae sey eer ad feritriedy — hachtentiaine fa EVE Figure 1: Top Tips. Please be aware of your surroundings and what could and is not necessarily correct.4 V2.5 GRADUATE INSTITUTE , How this Workbooks Speaks to your Qualification ‘As you are aware you are completing a qualification that specifies that you need to demonstrate evidence against its outcomes, as noted below. You will note that each question is linked to the required knowledge, practical or workplace task that Is relevant. In particular, this workbook examines. Knowledge Modules: 1. KN Module 03: Risk Management Framework: Strategy and Policy, NOF Level 5, 5 Credits. (Part 1) Practical Module/s: Parts of 1. PM Module 02: Establish the Internal and External Risk Context, NOF Level 5, 3 Credits, and 2. PM Module 03: implement the Framework for Managing Risk, NOF Level 6, 5 Credits. Work Experience Modules: 1. WP Module 3: Establish the Internal and External Risk Context, NOF Level 5, 10 Credits. In all, this qualification is made up of the following compulsory Knowledge and Practical Skill Modules: Knowledge Modules: 1. Introduction to Risk Management, NOF Level 5, 5 Credits. 2. Risk Management Enablers, NOF Level 5, 8 Credits. 3. Risk Management Framework: Strategy and Policy, NAF Level 5, 5 Credits. 4 Risk Management Framework: Processes, NOF Level 6, 10 Credits. Total number of credits for Knowledge Modules: 28 Credits.te, V2.5 GRADUATE INSTITUTE Se OF FINANCIAL SCIENCES Practical Skill Modules: Total number of credits for Practical Skill Modules: 28 Cre‘ 3. Prepare and Facilitate Risk Treatment Plans for a Business Unit., NOF Level 5, 2 Credits. 4. Establish the Internal and External Risk Context, NOF Level 5, 3 Credits. Implement the Framework for Managing Risk, NOF Level 6, 5 Credits. Create and Sustain Risk Management Partnerships, NOF Level 6, 5 Credits. Assessment of Risk, NOF Level 6, 8 Credits. Monitor, Review and Improve Risk Management Activities and Processes., NOF Level 6, 5 Credits. ication also requires the following Work Experience Modules: Contribute to the Implementation of the Risk Management Framework for Managing Risk in the Business Unit, NOF. Level 6, 15 Credits. Identify Risk Management Partnerships, NAF Level 6, 10 Credits Establish the Internal and External Risk Context, NOF Level 5, 10 Credits. ‘Assessment of Risk, NOF Level 6, 16 Credits, Prepare Risk Treatment Plans for a Business Unit, NOF Level 6, 8 Credits. Monitor and, Review Risk Management Activities and Processes, NOF Level 6, 10 Credits. Total number of credits for Work Experience Modules: 69 Credits. EXIT LEVEL OUTCOMES 1. Implement the framework for managing risk in the business. 2. Create and sustain risk management partnerships. 3. Establish the internal and external risk context. 4. Assess risk in order to produce and update a risk profile for a business unit. 5, Prepare and facilitate risk treatment plans for a business unit, 6. Monitor, review and improve risk management activities and processes.ahbe = 5 +22 GRADUATE INSTITUTE OF FINANCIAL SCIENCES ASSOCIATED ASSESSMENT CRITERIA Associated Assessment Criteria for Exit Level Outcome 1 ‘+ Risk management frameworks of various business scenarios are interpreted and such Interpretations to different business contexts is applied. ‘* Within various business scenarios: what is in place, what needs to be done and which process to support the implementation process will be identified, Associated Assessment Criteria for Exit Level Outcome 2: ‘* Anunderstanding of the criteria for identifying risk management partnerships in various business scenarios is shown. ‘* Anunderstanding of the dynamics, challenges and need for support faced by business ‘managers in fulfilling their risk management roles and responsibilities is shown, '* Anunderstanding about the art of creating rapport and trust in sustaining stakeholders buy- in are shown. Associated Assessment Criteria for Exit Level Outcome 3 ‘*Anunderstanding of how the internal and external risk contexts influence organisational risk is demonstrated, ‘* Anunderstanding of how the internal and external risk contexts influence and impact the business and its risk profile is shown. Associated Assessment Criteria for Exit Level Outcome 4 ‘+ The what-if- and why scenarios are analysed ‘* How to extract and contextualise risk- and control-information is understood, ‘© Arisk register is compiled and updated, Associated Assessment Criteria for Exit Level Outcome 5:GRADUATE INSTITUTE OF FINANCIAL SCIENCES ‘+ The what-if and why scenarios are understood in order for treatment options to be determined. ‘* Responsive plans are formulated and shown, Associated Assessment Criteria for Exit Level Outcome 6: ‘© The what-if and why scenarios are understood in order for in-cycle and out-of-cycle to be monitored and reviewed, ‘* What has to be monitored and reviewed (responsiveness) and how to monitor and review (methodology) is shown.Slide / Facilitation Exercises The following Questions have been asked of you during your class / facilitation sessions and you should have had some feedback on each question during this time, Please record your answers accordingly. (ty { rn IOV PART A. SUBMISSION REQUIREMENT KN 3.01 —KN 3.15 (All are Compulsory) Competency Requirement is a minimum of 63 / 90. Learning Unit 1: (M-03-KTO1: Communicating and Consultation Reflection Exercise No: KN 3.1: Stakeholder Management Requirement: ‘Answer the Question below. Question Why would the FSCA not be considered a stakeholder in your organisation — or would it. Discuss this question. (2 Marks) Your Answer / YES ie waul afot ration must be orfidedby the Financial Sector Conduct \ Authority i \ financial intuition iahbe = 5 +22 GRADUATE INSTITUTE FINANCIAL SCIENCES Reflection Exercise No: KN 3.2: Combined Assurance Modelling Requirement: ‘Answer the Question below. Question Consider the following 4 process items. aot 1. Take Action, 3 <-~ - (fr ) 2. Conduct Review, 4 ~ a 3. Measure and Report2-—— 4, Plan and Map.1 1. Identify the Model that includes each of these steps. (2) 2. Prioritise them into the correct order. (2) 3. Add a justification statement to each. (8) K (12 Marks) | } Reflection Exercise No: KN 3.3: Stakeholder and Communication Requirement: Reference: This activity matches to Activity 1 in the Practical Assessment Module and to PM-03- S01: Determine the business of the organi ‘Answer the Question below. Question Determine a project that currently underway in your organisation. If you are not aware of one or cannot disclose the details of one, then please use a fictional one. + Brainstorm and list the stakeholders, their objectives, and methods of communication. * Develop a communication plan for the project including all required elements. + Discuss two documents that you would source to complete your PEST Analysis.a be, Zo GRADUATE INSTITUTE OF FINANCIAL SCIENCES (8 Marks) Your Answer Projects PEST Analysis, A project manager will be required Objectives Planning for the’Schedule, scope and cost of your project will help you nop y6e ae and objective. Communication The need be available physically daily, emails and telephonic conversation will also be used. Investors Objectives Invest to-rfaintain capital, Invest to achieve income. Invest to achieve incomé and growth. Communication Methods-of Communication will be through emails, and telephonic Employees Objectives This is ways to measurs-progress and performance for members of a team. These can help- System Data. is the software that by system is to turn an organizatio organize and analyze data, The purpose of an information data into useful information that can be used for decision making in (6r collecting data from a predefined group of respondents to gain nts into various topics of interest. They can have multiple purposes, ‘can conduct them ip many ways depending on the methodology chosen and the study's goal ‘+ Interviews and Focus Groups. Focus groups typically-aré (ised to understand how people with common interests feel and think about an issue, a product, a service, or an idea. Reflection Exercise No: KN 3.10: Different Tools Requirement: ‘Answer the Question below. Question Think about which method you would adopt that will demonstrate that you have an understanding of the relationship between the organisations culture, processes, structure and strategy, as well as the organisations fit with its external environment. 1, Inno less than 5 lines (50 words) discuss this. Please demarcate, using headings and subheadings. (10 Marks) ~I T L E SRE sO > Oraanizational cule n some Way defines the organizational suture ofan organization but the structure also partially defines the culture of an organization, > Itecan also be said thatthe structure is framework forthe culture to be implemented, while the culture dictates how the company should be structured, > Strategy is how your organization goes about its work is its strategy (vs. your strategic plan document). > This includes the plans that set out how your organization will use its major resources to meet specific goals,GRADUATE INSTITUTE OF FINANCIAL SCIENCES > Structure is the way the pieces of your organization fit together to meet a common goal Organizational structure refers to the, objectives. Organizational Culture fviour, and attitudes of the employees. Both are equally y ffi, rules, policies formed by the company to achieve the \ Report on the risk. Organization Culture | (ance Five Steps of Risk Management Process Identify Monitoring & potential a Reviewing risks the Risk Risk Management Analysing ‘ Process the risk Treating the Risk Evaluating the Riskahbe +22 GRADUATE INSTITUTE (Organizational Structure Chart Reflection Exercise No: KN 3.11: Cause and Effect Requirement: ‘Answer the Question below. Question 1. Drawa graph with a x axis and a y axis. 2. Label the x axis “Probability” (Likelihood) and the Y axis “Severity” (Impact). 3. Further label each 1-5. 4, Now choosing one of the risks that you identified in Reflection No 1 and assign it a value between 1 and 5 for both Severity and Probability, with 5 being the highest impact. 5. Using these numbers, plot the risk values on you graph and 6. calculate the Risk Rating, (5 Marks) Your AnswerGRADUATE INSTITUTE FINANCIAL SCIENCES Fraud Risk 1. Risk RatifgProbabiity x severity . 515-25 J oa 238 5 ~ Latpo- bor nak Nr \ J D yNOKZ Reflection Exercise No: KN 3.12: Cause and Effect Requirement: ‘Answer the Question below. Question 1. Ona piece of paper, visualise for yourself the Risk Severity Matrix. 2. Using you figures from Reflection no 3, indicate where you would place your risk on your visualising. (8 Marks) Your AnswerGRADUATE INSTITUTE OF FINANCIAL SCIENCES Probability Low Medi High Extreme ‘The risk identified is classffied under extreme. Reflection Exercise No: KN 3.13: Risk Treatment Requirement: ‘Answer the Question below. Question 1. Considering the principles and Process for the treatment of your identified risks used in reflection 1,2 and 3. 2. Using the template demonstrated to you for RISK TREATMENT, produce a simple plan to cope with your risk. (5 Marks)ats Ze GRADUATE INSTITUTE Your Answer creer LO a ee ea a ror Treatment Tasks Owners _ required one Mitigation | Kevin- | Improve | Sipho from Risk and Fromit | Security | Forensic |} software | compliance oenrtmet atten faerie tors, [open | — is and J Project | | managers Reflection Exercise No: KN 3.14: Cost Benefit Analysis Requiremer ‘Answer the Question below. Questiona 4 V2.5 GRADUATE INSTITUTE FINANCIAL SCIENCES Consider the processes for evaluating the appropriateness of various risk treatment options ‘through Cost Benefit Analysis. 1. Use two risks to present an example using the Template provided. (6 Marks) Your Answer. Assessment Cost Benefit Capital costs. 1000 000. 00 R250 000.00 €.g., major capital items such as equipment, land, assets Maintenance costs R100 000.00 R50 000.00 eg, annual/recurrent costs of. asset maintenance - Other recurrent costs RAS 000.00 R50 000.00 e.g., consumables, utility _ costs, te — Training costs R150 000.00 R250 000.00 Decommissioning costs RO RO 4g, redundant equipment or buildings — L L Residual values —7R200 000.00 =~ 00 Impacts to R10 000.00 R20 000.00 users/stakeholders. e.g., time, morale, performanceahbe = 5 +22 GRADUATE INSTITUTE FINANCIAL SCIENCES ‘Accident or incident costs/__] R15 000.00 R25 000,00 savings Total {) ft rc ~ nC nndog whe CMC onahbe = 5 +22 GRADUATE INSTITUTE FINANCIAL SCIENCES Reflection Exercise No: KN 3.15: Knowledge Check Requirement: Consider the following question by taking a moment to reflect or discussing withing your groups (if possible — your facilitator will assist) the following. Be honest with yourselves. If you cannot answer any of the questions, then please review the relevant section again, Check the box if you are comfortable that you can discuss risk related standards and guidelines. Question Can you discuss risk related to the following areas? Yes No 1._Listand describe the different tools and techniques for determining and monitoring internal and external contexts. 2. Demonstrate an understanding of the relationship between the organisation's culture, processes, structure and strategy, as well as the organisation's fit with itséxternal environment. 3. Describe the principles, too¥ and techniques for identification, analysis and evaluation of risks “@,_Descyibe the principiés and processes for identifying treatment oats devel fg treatment plans and treating risks. 5, Describe-thé processes for evaluating the appropriateness of various risk treatment options through Cost Benefit Analysis. { } If you answer no to the above questions, you will need to review the module and then talk to the facilitator to assist you. Your Comments Total for this Section 50 Marks Combined Total for Both Sections 90 Marksahibe, = 5 +22 GRADUATE INSTITUTE FINANCIAL SCIENCES Practical Module No 1 Please note that the questions inthis section are only partially complete and that that you, the leamer and Assessor, must refer to the Internal Assessment Guide for Module 3. In order to complete the following questions, you may need to familiarise yourself with the Scenario - Assessment Guide: Bank of Azanzi. Please state if you are using this scenario or another to answer the following questions. ‘Scenario being used for Questions: PARTB SUBMISSION REQUIREMENT KN 3.16 - KN 3.21 (All are Compulsory) Competency Requirement is a minimum of 56 / 80. Practical Exercise No: 3.1 internal and external contexts Requirement: Reference: This act ity matches to Activity 2 in the Practical Assessment Module and to PM-03- S02: Describe the internal context of the organisation ‘Answer the Question below. Question Using your same project that you completed in Activity 1 (See Question KN 3.3) Define contexts according to the following: 1. Use a Pest Analysis to determine Internal Contexts — 4 items per quadrant. 2. Use Porters 5 Forces to determine External Contexts ~ 5 required, 3. Brainstorm and make a list Risk Management Criteria (25 Marks) Your AnswerNee V2.5 GRADUATE INSTITUTE SJE oF Financia. sciences 1. Home Loans Political Housing laws will lead to a temporary increase in demand for homes by government influence through tax credits, deductions, and subsidies. Economic Sellers may find it more difficult to sell their property because of the current economic climate. Recession affects access to financial products like Home Loans Social + Number and ages of people moving into or out of the area, and the composition of households Technological Data is expensive thus makes it difficult to access products and services. 2. Porter's S Forces: Fraud Threats and new entrants Customers will likely take their business to new providers who are not exposed to fraud. Threats of Substitutes Customers will look for alternative ways of keeping their monies. e.g. by keeping it under the mattress. They can put money in cryptocurrencies. Bargaining Power of Customers Bad reviews from customers Bargaining Power of Suppliers Suppliers may not want to associate with a bank that is vulnerable to risk, Suppliers may also increase prices Extent of Rivalry Losing business to competitors who experience less chances of fraudulent activities. C. Risk Management Criteria ‘+ Risk AppetiteGRADUATE INSTITUTE FINANCIAL SCIENCES + Risk Tolerance © Acceptable Risk # Unacceptable Risks * Consequences * Likelihood © Risk Ratings Practical Exercise No: KN 3.17: The external context of the organization Requirement: Reference: This activity matches to PM-03-PS03: Describe the external context of the organization. No facilitation exercise. Answer the Question below. Question Using your same project that you completed in Activity 1 (See Question KN 3.3) 1. Identify the external stakeholders (at least 2) and determine their impact on the organisation 2. Describe the importance of considering how regulatory changes can affect an organisation in its general operations, (Minimum requirement ~ 4 changes) Hint: Think of using categories and use a table to do this. (10 Marks) Your Answer External Stakeholder Impact on Organisation I. Supplier (Service Provider) © Without a solid relationship with its. suppliers, a company cannot offer its own customers a consistently high-quality product or service. + Those businesses that get it right are more likely to retain customers‘and have those customers, recommend the products or services to a friend. 2. Customer + When the organization know what customers buy and how they go about buying those products, organizations can more easily spot aneed that has not yet been satisfied 2. Regulatory Changes ‘A. POP! Act 2013- the need for the business to get customer consent when processing ‘customer's personal information. B, NCA 2017- Customers to authenticate debit orders that gets off their accounts C. Financial Act sector Regulation Act 2017- provide for information sharing arrangements; to create offences; to provide for regulation. It protect consumers and investors and to ensure that the financial system remains stable and continues to make funding available for investments that support the economy. D. South African Reserve Bank- protect the value of the currency in the interest of balanced and sustainable economic growth. Practical Exercise No: KN 3.18: Risk Identification Requirement: Reference: This activity matches to Activity 3: PM-04-PSO1: Identify Risks ‘Answer the Question below. Question Using your same project that you completed in Activity 1 (See Question KN 3.3)a 4 V2.5 GRADUATE INSTITUTE FINANCIAL SCIENCES 1. Either Brainstorm or use a What If method to identify and list 10 risks to the project achieving its objectives. 2. Ensure that you describe the risk adequately. Hint: Think of using categories and use a table to do this. (10 Marks) Your Answer Project: Home Loans * Lenders need to determine whether you can comfortably afford your payments. + Cost of capital and control must be considered ‘+ Inadequate training of staff on operating the system. ‘+ System Failure. * It can be costly for the company, * Exceeding the budget for establishing the project. * Over relying on outsourced company. * Inadequate finances to get the project going ‘+ Employment History, Credit Score, Purpose of the Loan, Amount of Loan to be closely looked to as we may offer home loans to vulnerable customers if these are not checked. Unstable Repo rates may affect the interest rate. Practical Exercise No: KN 3.19: Risk Analysis Requirement: Reference: This activity matches to Activity 4: PM-04-PSO1: Identify Risks Answer the Question below. Question Using your same project that you completed in Activity 1 (See Question KN 3.3)a be, Zo GRADUATE INSTITUTE FINANCIAL SCIENCES 1. Based on the 10 risks identified, select 5 and complete a risk register that includes the following fields: + Risk Name + Causes + Consequences + Existing Controls + Control Effectiveness + liketthood + Risk Rating (10 Marks) Your Answer 1236470581 Risk Name Causes Consequence | Existing | Control | Likelihoo | Risk es Controls | Effectivene | d Rating ss 1. System Failure | Poor High (5) Regular —_| Highly Medium maintenance system | Effective | (3) 5 e/ Network Monitorin issues & * 2. Over [Nothaving | Medium (3) [Havein- | Minimal | Medium relying | own house | Effective | (3) on resources back-up outsoure ed companya We Ze GRADUATE INSTITUTE OF FINANCIAL SCIENCES 7 3 Employing] Medium (3) | Training] Highly High (5) 3X Inadequa | inexperienc ofstuff | Effective 5 te ed and training | under ofstaff | qualified on staff operatin gthe system, 4 Tow budget | Medium (3) | Put Highly High (4) | 3xé Inadequa | allocation enough | Effective 2 te budget in finances the toget project the project going. 7 5 Wrong Tow (2) Qualified | Highly High (5) Exceedin | calculation Accounta | Effective o gthe —_| of budget nto budget calculate for the establishi budget rg the project. Practical Exercise No: KN 3.20: Requirement:Zo GRADUATE INSTITUTE OF FINANCIAL SCIENCES Reference: This activity matches to Activity 5: PM-04-PSO2: Analyse risks and PM-04-PSO3: Evaluate risks Question Using your same project that you completed in Activity 1 (See Question KN 3.3) From your risk register in Activity 4 / Question KN 3.19 (above): 1. Plot the 5 risks on a risk matrix. 2. Provide evaluation comments on how the risks should be treated based on their ratings. Hint: Think of using categories and use a table to do this. (10 Marks) Your Answer Severity Probability ‘The risks will be ranked according to their scores. 1. Risk 2. Risk2 3. Risk3. 4. Risk 4 5. RisksaNbe, V2.5 GRADUATE INSTITUTE FINANCIAL SCIENCES a Practical Exercise No: KN 3.21: Risk Treatment Plan Requirement: Reference: This act ity matches to Ac 6: PM-05-PSO1: Develop a risk treatment plan ‘Answer the Question below. ‘Question Using your same project that you completed in Activity 1 (See Question KN 3.3) For the 5 risks in the risk register: 1. Determine risk treatment options for each risk (Minimum requirement =3) and allocate owners and due dates. 2. Take your highest risk and develop a full risk treatment plan for one of the treatment actions. Hint: Think of using categories and use a table to do this. (15 Marks) Your Answer A) Risk Name Treatment ‘Owners Timeframes Option 1, System Failure Kevin- From iT | IT Immediately Department 2, Over relying on outsourced company Kevin Marketing On-going. Steenkamp Marketing Dept 3, Inadequate training of staff on operating the system. | Peter Govender | Learning and _ | On-going Trainer Development 4, Inadequate finances to get the project going, Tshepo Mlambu | Finance Immediately Portfolio Department Manager 5. Exceeding the budget for establishing the project. Jephas Kwirinda | Project Immediately Manager Manager4 "> GRADUATE INSTITUTE FINANCIAL SCIENCES B) Risk Description Risk Rating ‘System Failure 5 80 Marks As this POE workbook is part 1 (3.2) of two books, no reflection exercise is required. This will be provided for at the end of workbook no 3.2.