only need help with task 2 and 5 rest of the assignment I DONE ALREDY, NO WORD LIMIT ANSWER MUST BE IN REASONABLE WORD.
Assessment cover sheet
In order for your assessment to be marked you must complete and upload all tasks and this cover sheet via the AAMC Training Group portal. Your assessment tasks must be uploaded in an electronic format i.e. Word, Excel, PDF or Scan. A maximum of five (5) attachments (maximum 20MB each) can be uploaded for this assessment. Please see the step-by-step instructions in your Member Area on how to upload assessments.
Assessment name Risk Management Assessment
Years in industry
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Checklist of attachments:
? Task 1 – Written activities
? Task 2 – Project
? Task 3 – Case study 1
? Task 4 – Report
? Task 5 – Case Study 2
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? Face to face Trainer’s name:
? Correspondence ? Online
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RISK MANAGEMENT ASSESSMENT
You may be able to claim credit transfer for a unit/s of competency that you have previously completed with AAMC Training or another RTO. If you have been awarded a record of result or statement of attainment for any of the units detailed below then please go to the Credit Transfer tab in your Learning Centre and follow the prompts.
This assessment relates to the following units of competency:
• BSBRSK401 Identify risk and apply risk management processes
• FNSRSK502 Assess risk
Please refer to AAMC Training’s full Recognition Policy for further details.
• Your answers to each of the tasks are to be typed into this document or supplied electronically and uploaded.
• No assessment word count has been specified although you are expected to provide good quality answers to each of the questions.
• Although some general discussion between students covering the assessment is allowed your responses to each of the questions must be an individual effort.
• PLEASE NOTE: AAMC Training only wants to see your own work. Please do not upload parts of the learning guide or instructions on how to complete. When this extra information is uploaded it presents unnecessary work for the assessors and in turn delays our assessment responses.
Task 1 – Written activities
1. Name the two categories of risk.
1 Pure risk
2 Speculative risk
2. Pure risk or speculative risk—which one can usually be mitigated by transferring the risk to another party i.e. insurance company?
3. What are the four steps in the risk management process?
1. Identify the potential risks and assess their impact
2. Examine the different courses of action available and develop a plan for implementation
3. Implement the plan
4. Review and evaluate the plan
4. In assessing credit risk from a single borrower, a lender must consider what three issues?
1. Default probability: The probability of occurrence of default over some specified horizon or a year.
2. Credit exposure: The quantity of the outstanding obligation after the occurrence of default.
3. Recovery rate: The portion of the exposure during the default that might be recovered through bankruptcy proceedings or other form of settlement.
5. The seven Cs analysis frame work is the most common of all expert systems. It involves examining the borrower using the seven key principles in lending; list them.
7. common sense
6. What are the more common types of security?
Mortgage of land, Guarantees, Liens, General and specific securities agreements, Mortgage of goods, Credit sales and lease contracts, Bill of sale.
7. What does the PARSER analysis method consider?
It considers of risk rewarded relationships and credit worthiness of the borrower. Appropriate ways of determining the reward are not provided.
Task 2 – Project
This task requires you to identify and explain two risks under each category in the table below. These risks must directly impact your business as a finance broker and those stakeholders involved both internally and externally to your business. Please note: explaining a risk means that you must explain your answer. For example; just stating ‘’workplace injury’’ does not explain the actual risk you have identified. We would expect to see for example: power cords lying across a workspace that people could trip over, as the identified risk.
a. Using the table below, make a list (minimum of two in each category) of what you perceive to be risks for each of the key risk areas for Finance/Mortgage Industry representatives AND list who would be the internal and external stakeholders in the risk identification process.
Economic Stakeholder/s Manage Safety
& Health Stakeholder/s
Internal External Internal External
There is a risk that interest rates could increase which could produce the number of investment loans written. Broker, owner, manager, staff Clients, lenders, aggregator, LMI, Accountant, referrers, RBA, bank branches. Fire or explosions are the most common risk to a building. Workers,employees
Team member, staff Organization
There is a risk that commission rates/structure could be reduced by the lender which could cause a revenue loss to the business. Hazardous material risk is present where spills or accidents are possible like gas, acid .
Regulatory/Legal Stakeholder/s Professionalism and Reputation Stakeholder/s
Internal External Internal External
Marketing documentation Stakeholder/s
b. Once completed; provide a brief commentary on your understanding of the Australian Standard AS/NZS ISO 31000:2009 Risk management — Principles and guidelines, i.e. definition and how it affects you as a Finance/Mortgage Industry representative.
Task 3 – Case study 1
You have an existing finance broking business which has grown over time. The business has several key staff members including:
• 1 Responsible manager
• 1 Loan processor
• 3 Finance brokers
• 1 Personal assistant/office manager
• 1 Receptionist
You have been approached by a new client who is expanding his business operations into a franchise opportunity and while he has not had his financials prepared by his accountant for the last two years, he wants to use the family home as security and obtain a loan. The client also informs you that he has a fair amount of cash available to assist in meeting the repayments if required.
You are just about to meet him for the first time. Use the risk register below to identify and describe three potential risks to your business, and three potential risks to the client arising from this proposal. Remember, when identifying risk, you need to consider both what can go wrong and how it can go wrong.
Risk L C Risk rating
Your organisation’s risks
There is a risk that franchise system growth might not go as planned by our team. 4 4 16 This is high risk, because we have many new brokers who are inexperienced and the loans may be laudged without proper security.
Client might not comply with franchise laws because you are not upto date with tax. 3 4 12 Medium risk
Organisation might face a big loss in case the client wont able to handle the business properly. 2 5 10 Medium risk
Hi might lose his home in case the business goes down. 4 5 20 High risk
He might find difficult to do the repayments if business is not going good. 4 4 16 High risk
Client might not get approval for expanding his business with new franchise 2 2 4 Low risk
Task 4 – Report
Using the activity in Task 3 – Case Study 1, complete the following template. Select one of the risks from the risk register and develop an action plan for dealing with this risk. Consider all of the members in your business and how they may play a role in the various areas listed in the plan. Remember a preventative action is one that should stop the risk from occurring and corrective actions need to be considered after the risk has occurred to stop it from happening again. Monitoring and review actions are important to ensure that the business is regularly checking their processes to prevent reoccurrences of the risk.
Risk Item no 1 Describe risk item There is a risk that franchise system growth might not go as planned by our team.
Responsible area Management
Initial assessment Likelihood Consequence Rating
4 4 16
Training Provide all the basic training how to perform business activities while considering customer and business needs.
Operational Ensure necessary asurances are in place from lending sources prior to commencement of project for additional funds.
Managerial Ensure the client has submitted all the appropriate documentation required for the business.
Responsibilities Book and speaker
MONITORING & REVIEW ACTIONS
Task 5 – Case study 2
In this Case Study you are the credit assessor for ABank. In your role as the credit assessor you are required to determine the risks associated with the scenario below. The following information is from a loan application submitted to ABank by an authorised credit representative:
Applicant Single male applicant (29 years of age).
Loan Details and Purpose Applicant wants to buy an investment property for $450,000 and borrow $405,000 plus LMI. A loan term of 15 years is requested with an Interest Only product.
The Loan to Value Ratio (LVR is 90.00%);
Credit History Applicant has 3 Consumer Payments Defaults listed in his Credit Report
Residence Is currently living at home with parents and is paying no rent. He does not have his own home.
Income Applicant is a sub-contractor working in the mining industry for 2 years. The applicants income is $100,000 per annum.
The likely rental return for the property is in the vicinity of $420.00 per week.
Credit Card Limit of $8,000 with a current balance of $5,000.
Other Loan Debts $30,000 car loan with repayments of $609.00 per month.
Assets Savings with a bank $50,000
Small assets with a total value of $60,000
Household Living Expenses $1,200.00 per month
Costs Stamp duty and purchase costs to be paid from savings.
Recommendation The Loan Application is recommended for pre-approval by the authorised credit representative.
1. Complete a Risk Assessment using the Risk Register template below, noting all points listed:
• List and highlight 3 Risks you consider to be important and which you have identified from the above Loan Application scenario and list the risks you have identified in the relevant column.
• Rate each of the 3 Risks according to their Likelihood (L) and Consequence (C) of a negative event occurring and insert the ratings in the relevant columns.
• Calculate the Risk Rating (LxC) value for each of the 3 Risks and insert the Risk Rating values in the relevant column.
• Refer to the Ranking Key table below and record the required action
• Add your own comments on how the risk will be treated.
CLIENT RISK L C Risk Rating (LxC) Ranking
Consumer payment default on credit history 5 4 20 Licensee/stakeholder
Car loan repayments 3 3 9 Management responsibility must be specified
Credit card liability 3 3 9 Management responsibility must be specified Since the credit card is down by only $3000 and the client has savings of $50,000, he can afford to pay it off so that it won’t be considered as a liability in his loan application.
RISK ANALYSIS MATRIX
5 - Almost Certain 5 10 15 20
4 – Likely 4 8 12 16
3 – Possible 3 6 9 12
2 – Unlikely 2 4 6 8
1 – Rare 1 2 3 4
Ranking Risk Required Action
20-25 Extreme risk Licensee/stakeholder
13-19 High risk Senior management
6-12 Moderate risk Management responsibility must be specified
1-5 Low risk Manage by routine procedures
2. In ABank if the loan presents some high risks (risk rating 15-20), it can often fall outside of your approval limits or delegated lending authority (DLA). You have a senior credit assessor that you refer loans for approval that present higher risks. Based on your risk ratings determine if the Loan Application is outside your Delegated Lending Authority (DLA). Briefly explain why you may need to escalate the loan application to a higher DLA holder, for approval sign-off.
AAMC (2010). Australia-AAMC Training Group - Home. Aamctraining.edu.au.
RMS1 Risk Management Statement RMS1 Miscellaneous Professional Statements.
Saiglobal.com (2016).AS/NZS ISO 31000:2009/ Risk management-Principles and guidelines/ SAI Global.