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  1. TITLE:Apply technical knowledge to explain business risk and possible strategies to finance risk
  1. UNIT STANDARD NUMBER:242608
  1. LEVEL:5
  1. CREDITS:10
  1. FIELD:Business, Commerce and Management Studies

Sub FieldFinance, Economics and Accounting

  1. PURPOSE:

This Unit Standard is intended for Internal Audit Managers, Senior Financial Managers, Directors of Companies, people involved in corporate financial planning, Risk Managers and Intermediaries who operate at corporate, commercial and industrial level. It enables learners to design risk financial solutions to meet the needs of specific corporate, commercial and industrial clients and to optimise productivity and efficiency of resources.

The qualifying learner is capable of:

  • Explaining the consequences for an organisation that does not strategise risk appropriately.
  • Analysing the capacity of an organisation for risk.
  • Applying technical knowledge and skill to explain business risks in medium to large organisations.
  • Explaining how an organisation’s risk appetite influences the financing of risk.
  • Researching options or strategies to finance risks.
  1. LEARNING ASSUMED TO BE IN PLACE:

It is assumed that learners are competent in Communication and Mathematical Literacy at NQF Level 4.

8.SPECIFIC OUTCOMES AND ASSESSMENT CRITERIA:

Specific Outcome 1:Explain the consequences for an organisation that does not strategise risk appropriately

Assessment Criteria:

1.1The operational consequences for an organisation that does not have a risk finance strategy are discussed with reference to business interruption and restart up risks.

1.2The legal consequences for an organisation that does not have an appropriate risk finance strategyare explained with reference to human resources and environmental factors.

1.3The need for disaster recovery plans is explained as a strategy to finance risk with reference to the consequences if an organisation does not have a disaster recovery plan.

Specific Outcome 2Analyse the capacity of an organisation for risk

Assessment Criteria:

2.1The capacity of an organisation in terms of human, material and financial resources is analysed in relation to exposure to risk and current turnover.

2.2The capacity of an organisation for risk is compared to the risk appetite in order to determine the pay away capacity and potential retained capacity.

2.3The concepts of an alternative premium, and atraditional premium, are explained with examples from a specific organisation.

2.4The concepts of insurable risk,non insurable risk anduninsurable exposures are explained with examples from a specific organisation.

Specific Outcome 3:Apply technical knowledge and skill in order to explain business risks in medium to large organisations

Assessment Criteria:

3.1The business of a specific organisation is analysed in terms of exposure to risk.

3.2A risk control profile is compiled indicating the probability and severity of risks in a specific organisation.

3.3A risk finance analysis is complied indicating the frequency and severity of risks in a specific organisation.

3.4The potential impact of the identified risks on the financial resources of an organisation are explained with reference to positive and negative risk.

Specific Outcome 4:Explain how an organisation’s risk appetite influences the financing of risk

Assessment Criteria:

4.1The concept of risk appetite is explained with reference to a specific organisation.

4.2A cost of risk exercise is conducted to determine the cost of risk to a specific organisation.

4.3The cost of risk and risk appetite of the specific organisation are benchmarked in order to compare exposures and costs of protection against standard exposures and costs for a specific industry.

4.4External influences that could impact on decisions about risk are identified and an indication is given of current national and international trends.

9.ACCREDITATION AND MODERATION:

  1. Anyone assessing a candidate against this Unit Standard must be registered as an assessor with the relevant ETQA or ETQA where a Memorandum of Understanding (MOU) exists with the relevant ETQA.
  2. Any institution offering learning that will enable achievement of this Unit Standard must be accredited as a provider through the relevant ETQA or ETQA where a Memorandum of Understanding (MOU) exists with the relevant ETQA.
  3. Moderation of assessment will be overseen by the relevant ETQA according to the moderation guidelines and the agreed ETQA procedures.

10.RANGE STATEMENT:

The typical scope of this Unit Standard is:

  • External influences that could impact on decisions include, but are not limited to interest rates, inflation, currency markets, the insurance market and legislation.
  • Vehicles or instruments include, but are not limited to, cell captive, captive, risk retention, capital markets, offshore/onshore, pools, securitisation and derivatives.

11.NOTES:

  • CRITICAL CROSS-FIELD and DEVELOPMENTAL OUTCOMES:

This Unit Standard supports in particular, the following Critical Cross-field Outcomes at Level 5.

  1. The learner iscapable of identifying and solving problems in which responses show that responsible decisions using critical thinking have been made in assessing an organisation’s capacity and appetite for risk and designing a strategy to finance risk in a specific organisation.
  2. The learner iscapable of collecting, organising and critically evaluating information in compiling a risk profile and risk analysis, analysing an The learner iscapable of communicating effectively in presenting a strategy graphically.
  3. The learner iscapable of demonstrating an understanding of the world as a set of related systems by recognising that problem-solving contexts do not exist in isolation in explaining the consequences for a organisation that does not strategise risk.

Search words:business risk, risk finance, risk appetite

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L5 strategies to finance risk 18 June 2006