Question 1 Managing the Risk Management Function CLO6 (20 Marks)

1. Out of 110 diesel engines tested, a rework and repair facility found 9 had leaky water pumps, 15 had faulty cylinders, 4 had ignition problems, 52 had oil leaks, and 30 had cracked blocks. Draw a Pareto chart to identify the key problem in the production process. (4 marks)
2. Describe the difference between assignable variation and chance variation. (2 Marks)
3. Describe the difference between an attribute control chart and a variable control chart. (2 Marks)
4. Samples of size 5 are selected from a manufacturing process. The mean of the sample ranges is .50. What is the estimate of the standard deviation of the population? (3 marks)
5. Explain what do you mean by FEMA? (3 Marks)
6. What are the three steps for Root cause analysis? (2+2+2=6 Marks) Question 2 Risk Financing CLO4 (20 Marks)1
7. What is the general characteristics of Risk Financing - Risk Retention Methods (2 marks)
8. Outline two (2) Risk Financing - Risk Retention Methods and two (2) Risk Financing - Tranfer Methods (2+2+2+2=8 Marks)
9. Outline two (2) Benefits of Insurance to Society. (2+2= 4 Marks)
10. Using the table below show and explain whether the two assets A and B are ideal for Hedging (6 Marks)

YEAR	Return A	Return B
2010	32%	5%
2011	14%	15%
2012	4%	25%