THE UNIVERSITY OF THE WEST INDIES

EXAMINATIONS

OF APRILIMAY 2012
FOR PROJECT MANAGERS Paper: Duration: 2 Hours

Code and Name of Course: PRMG 6010 - RISK MANAGEMENT Date and Time: INSTRUCTIONS

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This paper has 4 pages and 6 questions.

ANSWER THREE (3) QUESTIONS SELECT ONE QUESTION FROM EACH SECTION AND ONE OTHER

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The University of the West Indies

Course Code

PRMG6010

APRIL/MAY 2012

Page 2

SECTION 1

1.

(a)

Define the following terms giving one example: (i) (ii) (iii) , (iv) (v) Threat Hazardous Analysis Vulnerability Analysis Risk Analysis Risk Management Strategy

[5 Marks]

(b)

Identify the principal threats to the following sectors in your country and suggest briefly what strategies you would recommend in mitigating their possible impacts; (i) (ii) (iii) The Tourism Sector The Agricultural Sector The Health Sector

[1~ Marks]

2.

(a)

Define the meaning of the following: (i) (ii) (iii) (iv) The Built Environment Natural Hazard Pandemic Desertification -

[5 Marks]

(b)

Identify and discuss the principal risk factors associated with the continued use of fossil fuel. Explain the following terms: . (i) (ii) (iii) (iv) Acid~ Solar Flares ,.Ozone Depletion Mean Sea Level Rise

[5 Marks]

(c)

[5'Marksl

(d)

Nuclear energy has been presented as the principal alternative to fossil fuel. Nevertheless there is a powerful lobby against its use. Discuss.

[5 Marks]

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Page 3

3.

(a)

Explain briefly the following: (i) (ii) (iii) (iv) (v) Muster Point Desktop Simulation The Richter Scale National Emergency Policy Third Party

[5 Marks]

(b)

. You have been appointed the new CEO for a large shopping mall and you bave been asked to develop a disaster plan for the compound. Explain how you would proceed.

[15 Marks]

SECTION 2
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4.

Reputable firmsperform workplace hazard analysis to assess risks and identify the consequences+al1dfrequency with which the hazard occurs. They plan and implement risk strategies to eliminate, engineering and administrative methods) these risks. Required: (a) Briefly identify an entity by product and process and briefly describe at least one hazard fr-omthe classification (Physical, Chemical, Ergonomic and Biological) that ~ad been heard of in the industry ofthe entity. Illustrate the use of the risk assessment decision tree. You are aware of the measures of consequence/severity in terms of physical assets, employees/personnel, environment and reputation. Discussalternative values of the measures used. mitigate, transfer and control (by

[5 Marks] [5 Marks]

(b) (c)

[5 Marks]

(d)

Briefly describe the use of engineering and administrative controls in the context of industrial hazards for the entity and adherence to OSHA and EPA regulations.

[5 Marks]

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Page 4

5. .

Derivatives markets have grown to approximately US$700B by 2010 worldwide. They may be used to hedge risks by minimizing the effects of commodity or price risk or to speculate on the future direction of prices. Required: (i) Explain and illustrate the uses of Futures/Forwards contracts and payoffs in terms of long forward or futures position and from a short forward or futures position. [6 Marks] Explain and illustrate the following options on forwards/futures contracts. Long Call1Long Put, Short Call/Short Put inclusive of premium, strike price and payoffs.
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(ii) ,

[6 Marks]

(iii)

Explain and illustrative-the use of SWAPS, between two 'companies using different currencies. Briefly discuss the potential for us~ of weaihcr derivatives, oil derivatives by a CARICOM Agency on behalf of CARICOM countries that import oil or depend on tourism, agriculture and etc.

. [3 Marks]

(iv)

[5 Marks]

6.

Corporate governance integrates systems and processes, specify the distribution of rights and responsibilities and checks and balances among the organizational stakeholders and internal and external monitors. Its benefits include reduction in enterprise risk and improving the efficiency, effectiveness and sustainability of an organization. Required: Discuss and explain the issues and problems in the following areas and suggestion for inclusion in a Corporate Governance framework: (i) (ii) Principal-Agent problem and executive incentives. The monitoring and regulatory activities of the Security and Exchange Commission. Systemic Risk, Bailouts and Moral Hazard. The Board of Directors: Board Selection, Fiduciary Responsibility, Duty of Care and Business Judgments.
[5 Marks]

[5 Marks]

(iii) (iv)

[5 Marks]

[5 Marks]

END OF PAPER
APRILIMAY 2012