RSK4803
EXAM PACK
FOR ASSISTANCE WITH THIS MODULE +27 67 171 1739
, Page 1 of 4 RSK4803
January 2023
JANUARY 2023
RSK4803
RISK FINANCING
Total: 100 marks
Duration: 3.5 hours
SPECIFIC INSTRUCTIONS FOR THE EXAMINATION
1. State your name, student number and the module code on the first page.
2. Include your student number in the heading of each page.
3. This examination will be proctored by means of the Invigilator app. The use of the app is
compulsory and failing to use the proctoring will be against university policies. Access the
Invigilator app now and log in.
Structure of answers
4. Answer all the questions.
5. You do not have to rewrite the question.
6. Start each question on a new page.
7. Use the same number sequence for your answers as per the questions.
8. Show all calculations.
9. Round calculations to two decimal places.
Preparing for upload
10. The naming convention for answer file: Student number_RSK4803_Exam
11. Ensure that the pages of the answer file are in the correct sequence.
12. You can only upload one document - combine all the pages into one PDF document.
13. Stop writing after 3.5 hours and immediately start your upload. You will only have
30 minutes to upload your examination answers to the myExams platform.
Declaration of own work
By submitting my answers to the examination paper, I hereby declare that I was admitted to
the examination, downloaded the examination myself, that it is my own work and that I have
not used assistance from other students or people to complete this assessment.
My online honour pledge also attests to the declaration
©
UNISA 2023
, Page 2 of 4 RSK4803
January 2023
INSTRUCTIONS FOR THE INVIGILATOR APP
Day of the assessment instructions:
• Please remember to keep your cell phone fully charged for the duration of the assessment.
• Please log into The Invigilator App if you have not done so yet. You need to be connected to the
internet in order to log in.
• Scan the QR code below once the examination starts. If you encounter difficulty with scanning of
the QR code, you can also enter the QR access code as indicated at the bottom of the QR code to
start the online invigilation. Please ensure that you are connected to the internet if you need to enter
the QR access code at the bottom of the QR code.
• Once the QR code is scanned, avoid any disturbances by putting your phone on airplane mode if
possible. No internet connection is needed during the assessment.
• Keep the Invigilator app open at all times on your cell phone during the assessment.
• You may place your cell phone next to you. Your cell phone does not need to face you however
should be close enough to hear the notifications from the Invigilator App.
• The Invigilator App will notify you when an action is required. In order to receive notifications do not
put your cell phone on silent mode and ensure media volume is turned up.
• When an action is required, a notification beep will be heard, and an instruction will be visible for
you to action promptly.
• Please take note that once the examination time is over, firstly focus on scanning and uploading
your script to your assessment platforms. Uploading your script is time sensitive.
• Once your script is uploaded on your assessment platform, you may switch on your data to start
the uploading process on The Invigilator app.
©
UNISA 2023
, Page 3 of 4 RSK4803
January 2023
Question 1 [8 Marks]
1.a. Distinguish between risk and uncertainty by using the game of chance in a casino as an
example. (4 marks)
1.b. From the example used in Question 1a, explain how uncertainty may influence risk
financing decisions. (4 marks)
Question 2 [22 Marks]
2.a. Distinguish between risk appetite and risk tolerance. (6 marks)
2.b. Explain how the risk appetite and the risk tolerance of an enterprise can influence both
pre-loss and post-loss risk financing decisions. (16 marks)
Question 3 [15 Marks]
3.a. Critically evaluate the following statement: “The purchase of insurance enables
enterprises to totally transfer the ownership of the risk”. (5 marks)
3.b. Explain the concept of moral hazard. (5 marks)
3.c. What are the measures that an insurer can use to reduce moral hazard? (5 marks)
Question 4 [15 Marks]
4.a. Argue the benefits of a deductible programme as part of the risk retention strategy from
the perspective of the insured. (8 marks)
4.b. Libre Logistics Ltd. insures against accidents of its motor fleet. The fleet consists of highly
specialised, imported refrigerator trucks. Contributing factors to the high value of incidents
are the poor conditions of the municipal and provincial roads and the quality of drivers.
Calculate the optimum deductible according to the total expected cost (TEC) rule and
argue which quote is the most appropriate by using the given loss experience of the
company. Show all calculations. (7 marks)
Table 1: Loss experience of the motor fleet over the last five years
Year No. of vehicles Average loss per No of accidents Total cost for the
event year
1 20 R1,500,000 10 R15,000,000
2 20 R2,200,000 12 R26,400,000
3 25 R1,750,000 15 R26,250,000
4 30 R2,000,000 20 R40,000,000
5 50 R3,500,000 25 R87,500,000
©
UNISA 2023
