Final_Assessment_6_Template_(docx_format).docx - [FAP Final...

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[FAP Final Assessment]Instructions: You must enter your answers to each assessment question in the sections noted below, and must not change any information contained within the first set of black brackets [] foreach Task.[ Task 1 ]ksatMemorandumTo: Project LeadFrom; FAP CandidateRe: Risk Management Policies Supporting the CDEFThis memorandum is intended to provide the CDEF management team with a list of risks that the fund faces along with recommended risk mitigation strategies for the most important of those risks.The following risk categorization and definition tool (RCD) identifies multiple risk relevant to themanagement of the education fund in the four major categories of risks: Financial, Strategic, Insurance, and Operational.Risk CategoryRiskDefinitionLikelihoodSeverityFinancialMarket ReturnThe risk that market returns differ from expectations, resulting in insufficiency orexcessive surplus in fund balanceMediumHighInflation Rate of TuitionThe risk that inflation rate differs from expectation, resulting in liabilities (futuretuition payments) being higher or lower than expectedMediumHighUnemploymentThe risk that unemployment rates increase or decrease due to economic downturn or other reasons, resulting in fund contributions being higher or lower than expected MediumLowCredit DefaultWhen investing in bonds, there is a risk that some bond issuers default on their obligations to the fundLowMediumInterest RateFluctuation in interest rates impacts the price and value of treasury billsMediumLowStrategicRegulatory/PoliticalRisk that future legislation does not support the CDEF’s goals, such as a legislated reduction in tax payments or a re-appropriation of funds (unlikely given that the fund was set up separate from other government funds)LowMediumReputational DamageRisk that stakeholders form an unfavorable view of the fund for any LowLowFA – page 1
reason, including political atmosphere orerrorsCapital AvailabilityRisk that the investment portfolio is not sufficiently liquid to cover financial obligations on any given business dayLowHighSocial/Cultural TrendsRisk that citizens of Cascadia favor college educations less in the future, opting for apprenticeships or other ways to enter to workforce soonerLowMediumInsuranceBeneficiary BehaviorRisk that the number of beneficiaries differs from expectation due to implementation of CDEF. i.e. attrition rates do not fully capture the new incentive to get a college educationHighMediumContributor BehaviorRisk that employed population size assumption does not reflect behavior change due to new tax (e.g. emigration)LowHighOperationalLitigationRisk that litigation costs (e.g. lawsuits over program eligibility or fund mismanagement) affect fund managementexpensesLowMediumReporting RiskRisk that material errors in investment statements increase internal cost due to re-work and external cost due to fines or settlementsLowLowLoss of Key Personnel

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