FINAL ONLINE SUMMATIVE ASSESSMENT

PROGRAMME Postgraduate Diploma in Risk Management

MODULE Introduction to Risk Management
YEAR 1
INTAKE July 2023
DATE 1 December 2023
 SECTION A [40 MARKS]
Read the case study below and answer ALL the questions that follow.

PIC FIRES INVESTMENT MANAGER IMPLICATED IN AYO DEAL

The Public Investment Corporation has dismissed a portfolio manager involved in the R4.3bn investment in JSE-listed IT
group AYO Technology Solutions. The state asset manager on Thursday confirmed to Fin24 by email that Victor Seanie, an
assistant portfolio manager of listed equities, had been dismissed following the conclusion of a disciplinary hearing. Seanie
was suspended in January this year, along with the corporation's executive head of listed investments Fidelis Madavo,
Fin24 previously reported. This followed an internal probe into the controversial R4.3bn AYO investment, which the PIC had
underwritten despite internal concerns that the company was overvalued. AYO has defended the investment, saying the
asset manager's funds are not at risk.

A preliminary report on the probe, in January, stated there was "blatant flouting of governance and approval processes of
the PIC". The PIC said at the time that employees were implicated in the irregularities, and for that reason suspended
Madavo and Seanie. Deon Botha, head of corporate affairs at the PIC, said in a statement to Fin24 that Seanie's
disciplinary process was headed by an independent chairperson. He said Seanie had been dismissed after being found
guilty of the charges levelled against him. He did not specify what the charges were, beyond saying they included "charges
of breaching the PIC's internal policies in investment decisions". "Mr Seanie is one of several senior investment
professionals who went through, or are undergoing, internal disciplinary proceedings, at this stage," Botha said. "The PIC
board is fully appraised of disciplinary proceedings against several implicated PIC officials and, like the PIC Commission of
Inquiry, concurs with the view that these should proceed." Fin24 reached out to Seanie, but he did not want to comment.

PIC commission

Seanie had appeared before the PIC commission of inquiry in January, shortly after his suspension, where he testified on
the AYO deal. He told the commission that his suspension was unfair, and he was only a small player in the transaction.
AYO is an information technology company in Cape Town businessman Iqbal Survé's Sekunjalo stable. The PIC invested
R4.3bn in AYO in late 2017 ahead of its listing on the local bourse. It's share price has since fallen from R43 a share at
listing to R5.60 a share. The PIC has instituted a court case against AYO to compel it to return the full investment plus
interest. AYO is opposing the matter and has denied that any of the asset manager's funds are at risk. Earlier in October,
meanwhile, the financial regulator the Financial Sector Conduct Authority raided the offices Sekunjalo. Surve referred to the
raid as a "classic intimidation tactic" by an "increasingly desperate cohort of politically entrenched cronies" and threatened
to sue the FSCA, saying it was on a fishing expedition to find information for the PIC's court case against AYO.

Article by Ormarjee and Cronje (15 Oct, 2019) extracted from: https://www.fin24.com/Economy/South-Africa/pic-fires-
investment-manager-implicated-in-ayo-deal-20191024

Answer ALL the questions in this section.

QUESTION 1 (40 Marks)

1.1 Considering the case study provided, critically discuss the strategies that can be adopted by Public (20 marks)
Investment Corporation (PIC) to ensure that they are not exposed to these risks. Make use of relevant
examples.
1.2 You have been tasked with presenting a compelling case to the executive management of the Public (20 marks)
Investment Corporation (PIC) regarding an emphasis to risk management. Discuss the contents of your
report.
 SECTION B [60 MARKS]
Answer ANY THREE (3) questions in this section.

QUESTION 2 (20 Marks)

With reference to any examples of your choice, critically discuss what risk analysis entails. Your response should provide a
detailed description of its components and variables.

QUESTION 3 (20 Marks)

The CEO of Smith and Nephew, a prominent global pharmaceutical company, has asked you to explore the components of
effective risk management within the pharmaceutical industry. Provide an overview of what your response would
encompass.

QUESTION 4 (20 Marks)

With reference to any examples of your choice, analyse the methods that can be employed to quantify the risk of loss or
adverse consequences stemming from deficient internal processes, systems, personnel, or external occurrences.

QUESTION 5 (20 Marks)

The CEO of ABSA has asked you to conduct a critical assessment of financial risks within the organisation. Your analysis
should focus on how ABSA might encounter financial risks and the potential consequences of these risks for the
organisation.

END OF PAPER