B3 2 6 6 14 marks Answer the following questions in relation to liquidity risk

Question B3(2 + 6 + 6 = 14 marks)Answer the following questions in relation to liquidity risk(i)What is liquidity risk?(ii)Explain the difference between market and balance sheet liquidity risk;(iii)Discuss the primary factors causing liquidity risk within corporates.

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 15 of 24 Question B3 (cont’d)

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 16 of 24 Answer ALL Questions in Section B. Question B4(2 + 4 + 4 = 10 marks)Compliance risk management is concerned with two classes of risk, regulatory compliancerisk and non-regulatory compliance risk. You are required to:(i)Explain the concept of compliance risk.(ii)Identify the significant differences between regulatory compliance risk and non-regulatory compliance risk.(iii)Usefour (4)examples to highlight the differences discussed in part (ii) above.

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 17 of 24 Question B4 (cont’d)

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 18 of 24 Part C: Short answer questions (20 marks) You are required to answer ONE (1) of the following two questions. Your answer must be given in the space provided on the exam paper. All questions in Part C are worth 20 marks each. Question C1(20 marks)Answer each of the following parts to this question.(i)Explain the role of the AS/NZS ISO 31000: 2009 risk management process;(ii)Explain the steps and the core elements of the AS/NZS ISO 31000: 2009 risk process;and(iii)In a diagram clearly show the interdependencies of these elements. (2 + 10 + 8 = 20 marks)

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 19 of 24 Question C1 (cont’d)

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 20 of 24 Question C1 (cont’d)

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 21 of 24 Answer only ONE (1) of the TWO (2) Questions in Section C. Question C2(20 marks)You are required to answer the following questions in relation to strategic risk:(i)Explain the concept of strategic risk;(ii)Discussthree (3)methods that can be used in the strategic planning process tomanage strategic risk;(iii)Identify thefive (5)primary areas where strategic risk management can be used toinform optimization decisions within a firm;(iv)Discuss three reasons suggested by a McKinsey survey of senior managers as to whystrategic decisions have encountered problems. (3 + 6 + 5 + 6 = 20 marks)

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 22 of 24 Question C2 (cont’d)

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 23 of 24 Question C2 (cont’d) END OF EXAMINATION

BFF5902 INTRODUCTION TO RISK PRINCIPLES BFF5250 David Robinson Page 24 of 24 For Office Use Only – do not write on this page BFF5902 Question Part Total A1 to A7 Part A B1 B2 B3 B4 Part B C1 C2 Part C TOTAL For Office Use Only – do not write on this page