AMERICAN UNIVERISTY OF MADABA (AUM) Principles of Risk Management (505101) Assignment # 2 Total marks of this assignment: 15 marks The assignment will be available for students on Wednesday 13th of May 2020. Deadline for finishing the assignment is Wednesday 20th of May 2020. Question number 1: A restaurant owner decided to cut some expenses by moving his place into a cheaper area. The new area is far from the old area and is located at a poor country side with small population. For each of the following risks facing the restaurant: 1. Calculate the gross level of risk 2. Plot each risk on the matrix provided in the last page 3. Define the most practical risk technique that can be used to treat each risk (Only 1 technique and relate it to one of the 4 T's concepts ) ....... Explain your answer briefly. a) Risk of losing old customers: Impact = 5 Likelihood= 4 The overall gross risk level = .............................. The control concept is ....................................... The most practical way to apply the concept is .............................................................................. ....................................................................................................................................... b) Significant decrease in number of customers: Impact = 1 Likelihood= 4 The overall gross risk level = .............................. The control concept is ....................................... The most practical way to apply the concept is .............................................................................. ....................................................................................................................................... c) Poor transportation services in the area Impact = 4 Likelihood= 2 The overall gross risk level = .............................. The control concept is ...................................... The most practical way to apply the concept is .............................................................................. ....................................................................................................................................... d) Lack of qualified employees in the area: Impact = 2 Likelihood= 2 The overall gross risk level = .............................. The control concept is ....................................... The most practical way to apply the concept is ................................................................................ ......................................................................................................................................... Question Number 2: Explain the risks that may be faced by banks. (Show your references). Good Luck