A young and energetic entrepreneur decides to start a new venture in the micro-loan industry. She has a seed capital of a Million rand and needs to now set up his business. She approaches the bank for more capital, and he has been requested to compile a business plan. This document will communicate all the relevant details of his business to the bank for them to decide on whether the venture is viable for them or not. One of the main aspects that the bank wants to assess is the risk appetite of the entrepreneur.

The entrepreneur approaches you as a risk specialist and requests your assistance.

4.1 Summarise your advice to the entrepreneur on how she can develop her risk appetite and communicate it to her prospective sponsors. (10 marks) 4.2 Identify at least five (5) risks (including at least one (1) opportunity and at least one (1) hazard risk) that the bank faces with this initiative and propose controls that can be put in place to manage the risks.