Application
This unit describes the skills and knowledge required to analyse risk factors for financial products, determine appropriate risk exposure management strategies, communicate these strategies to relevant staff and intermediaries, and manage the risk assessment strategies. It is aimed at setting the strategy for portfolio managers, including the types of business to target.
It applies to individuals who use specialised knowledge, systematic approaches and analytical skills to provide leadership in managing strategic organisational activity in financial services organisations.
Work functions in the occupational areas where this unit may be used are subject to regulatory requirements. Refer to the relevant regulator for specific guidance on requirements.
Elements and Performance Criteria
1. Determine risk assessment strategies | 1.1 Identify and evaluate criteria for acceptance or rejection of risks using standards for risk management as indicated by regulators 1.2 Determine organisational performance targets and capacity to assess and accept risk 1.3 Identify business risk and control risk elements of an organisation |
2. Review risk and compliance factors | 2.1 Identify and collate information on business and control risk elements 2.2 Investigate and review the data and information 2.3 Evaluate risk elements against known exposure factors and compliance where relevant with legislation, regulatory guidelines, industry sector compliance requirements and organisational policy 2.4 Evaluate risk acceptability factors within context of organisation’s mitigating capabilities and organisational requirements 2.5 Critically analyse risk considerations in the business strategic planning process in line with appetite |
3. Develop risk acceptance criteria | 3.1 Establish terms and conditions of risk acceptance criteria to satisfactorily cover organisational needs and risks 3.2 Document risk acceptance strategies, criteria and guidelines that meet requirements within delegated authorities 3.3 Obtain and review feedback on risk acceptance strategies, criteria and guidelines 3.4 Finalise risk acceptance criteria, and associated authority limitations, conditions and guidelines |
4. Assess operational capital management risk | 4.1 Develop fit for purpose capital models that meet regulatory requirements and organisational policies and procedures 4.2 Review risk profile and calculate potential operational risk exposure 4.3 Monitor internal and external losses and re-assess inherent risk and capital requirements 4.4 Undertake internal and external reporting to market and regulatory bodies |
5. Assess impact and implement risk acceptance strategies | 5.1 Identify and develop procedures and guidelines that staff should follow to adhere to risk acceptance strategy 5.2 Communicate risk assessment strategies, criteria, procedures and guidelines to relevant staff and intermediaries 5.3 Monitor risk acceptance strategy implementation |
6. Review risk assessment strategies | 6.1 Determine effectiveness of risk acceptance strategies in meeting risk management objectives 6.2 Document and communicate results to relevant staff |
Evidence of Performance
The candidate must demonstrate the ability to complete the tasks outlined in the elements, performance criteria and foundation skills of this unit, including evidence of the ability to:
determine and manage risk exposure strategies for at least two different types of financial products.
In the course of the above, the candidate must:
establish processes to communicate and manage implementation
establish processes to monitor, review and assess the effectiveness of the risk exposure strategy
consult and communicate with appropriate stakeholders.
Evidence of Knowledge
The candidate must be able to demonstrate knowledge to complete the tasks outlined in the elements, performance criteria and foundation skills of this unit, including knowledge of:
key features and purpose of standards for risk management as indicated by regulators
the key features of actuarial and financial principles and processes related to risk exposure strategies
industry hazards and risk exposures
methods of risk assessment, prevention, and application
key features of establishing risk acceptance criteria for low and high hazard risk areas, including meeting market conditions, and accepted levels of exposure within organisations
key organisational products and services, and associated risks and liability loss exposures
different forms that strategy process implementation may take in an organisation
internal and external operational risks
operational capital management
types of inherent risks
key features of industry sector legislation, organisational and regulatory guidelines, and compliance requirements required to produce the performance evidence
organisational policy, procedures, guidelines and authorities related to risk management.
Assessment Conditions
Skills in this unit must be demonstrated in a workplace or simulated environment where the conditions are typical of those in a working environment in this industry.
This includes access to:
office equipment, technology, software and consumables
legislation, regulations and codes of practice required to produce the performance evidence
standards for risk management as indicated by regulators.
Assessors of this unit must satisfy the requirements for assessors in applicable vocational education and training legislation, frameworks and/or standards.
Foundation Skills
Numeracy | Collates, interprets and analyses financial and statistical information to determine requirements |
Oral communication | Participates in verbal exchanges using active listening and questioning techniques to convey information, obtain feedback and elicit the views and opinions of others Articulates clearly, using concepts and language specific to the audience, and adapts tone and pace to engage and present information to others |
Reading | Critically analyses complex documentation from a variety of sources and consolidates information relating to specific criteria to determine requirements |
Writing | Uses clear and concise language, spelling and grammar, and terminology to convey information and provide detailed instructions Prepares logically organised documents using specific formats for the audience and purpose |
Teamwork | Uses a variety of communication tools and strategies in building and maintaining working relationships |
Initiative and enterprise | Uses formal analytical thinking techniques to identify or predict issues and generate possible solutions Explores and incubates new and innovative ideas through unconstrained analysis and critical thinking |
Planning and organising | Plans strategic priorities and outcomes within a diverse environment exposed to competing demands Gathers and analyses data and seeks feedback to improve plans and processes Makes high impact decisions in a complex and diverse environment, using input from a range of sources |
Self-management | Works autonomously, making high level decisions to achieve and improve organisational goals Takes a lead role in the development of organisational goals, roles and responsibilities Monitors and reviews organisational policy, procedures and adherence to legislative requirements |
Technology | Uses digital systems and technologies to enter, store or access information Adopts new and emerging technologies to complete work tasks |
Sectors
Risk management