This competency standard covers the skills and knowledge required to evaluate financial risk.

This unit contains employability skills.

This unit requires the application of skills and knowledge required

to evaluate financial risk.

It requires the ability to determine a client's financial risk profile and assess risk management options. It also includes preparing detailed reports and presenting findings to clients and other relevant people.

Financial Markets

1.1 Interpersonal skills are used to confirm clients financial needs , expectations and objectives, in accordance with organisationalrequirements

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q2c

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q2c

1.2 Valid and relevant information is obtained to determine the complexity of client's needs, in accordance with organisational requirements

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q2c

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q2c

1.3 The client's asset and liability management framework is analysed to ensure it matches their broader strategic direction and risk profile

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q6B

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q6B

1.4 The context for assessing risk is based on an understanding of the client's operating environment and core business

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q7a

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q7a

2.1 Assessment criteria for measuring the level of potential

or existing risk, together with an assessment of consequences is developed in accordance with organisational requirements

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q7d

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q7d

2.2 Information collected is assessed using assessment criteria and appropriate analytical techniques

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q6a

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q6a

2.3 Threat, consequences and vulnerability for a range of financial products is compared, in accordance with client and organisational requirements

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q7c

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q7c

2.4 Risk management alternatives are developed to include assessment of alternative and estimates of long and short term effects

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q7d

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q7d

2.5 Incidents and factors increasing or diminishing financial performance are identified, analysed and discussed with the client

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q9c

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q9c

3.1 Risk management alternatives are documented in

accordance with organisational requirements and relevant legislation

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q7c

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q7c

3.2 Retail client disclosure documents outlining client responsibilities are prepared and explained to the client

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q9d

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q9d

3.3 Client information is updated, modified and accurately maintained in accordance with organisational requirements

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q13

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q13

3.4 Risk analysis documentation is prepared and filed in accordance with organisational and legislative requirements

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q7d

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q7d

3.5 All information is handed safely and securely with due regard to client confidentially, legislative and organisational requirements

All 10 assignments: a00s102t11L01-10 Derivatives : Clients 1-10, Q2d

OR All 10 assignments: a00s102t12L01 - 10 Securities : Clients 1-10, Q2d

ability to use interviewing and questioning techniques to obtain information

research, evaluate and disseminate information to clients

apply reasoning and logical analysis to make decisions and solve problems

identify gaps in information and gather necessary information for alternative sources

apply high level analytical and critical reasoning

accurately identify existing or potential risks

use comparative analysis

consult with clients, team members and peers using appropriate communication and interpersonal techniques

evaluate client information against risk assessment strategies

model a professional and ethical approach to clients

relate to people from a range of social, cultural an ethnic backgrounds and physical and mental abilities

use computers, calculators and software systems

risk assessment techniques and processes

A03s001t01l00: Types Of Risk

A03s001t01l01: Mismatch Risk Q1-11

A03s001t01l02: Inflation Q1-9

A03s001t01l03: Interest Rate: Reinvestment, Market Volatility Q1-14

A03s001t01l04: Market Risk Q1-10

A03s001t01l05: Market Timing Q1-10

A03s001t01l06: Lack Of Diversification Q1-10

A03s001t01l07: Currency Q1-10

client and organisational confidentiality requirements

risk management standards

profile and financial information of the client

financial information sources

theories of management of investment and risk

A13s001t05l00: Portfolio Management Q1-na

A13s001t05l01: Rational For Portfolio Diversification Q1-10

A13s001t05l02: Capm Model Q1-10

A13s001t05l03: Active And Passive Portfolio Management Q1-10

A13s001t05l04: Portfolio Construction Q1-10

A13s001t05l05: Risk Adjusted Performance Measures Q1-10

A13s001t05l06: Problems With Performance Measurement Q1-10

A13s001t05l07: Assessing The Contribution Of Management Q1-10

a15s006t02L00: Securities Portfolios Q1-na

A15s006t02l01: Range Of Securities/Futures Products Q1-10

A15s006t02l02: Investment Options Using Securities Products Q1-

A15s006t02l03: Portfolio Risk Q1-10

A15s006t02l04: Risk Tolerance And Asset Allocation Q1-10

A15s006t02l05: Diversification And Portfolio Risk Q1-10

A15s006t02l06: Optimally Risky Portfolios Q1-10

A15s006t02l07: Hedging With Options Q1-10

A15s006t02l08: Hedging With Futures Q1-10

A15s006t02l09: Passive Portfolio Management Q1-10

A15s006t02l10: Active Portfolio Management Q1-10

a25s001t05L00: Portfolio Management Q1-na

A25s001t05l04: Diversification And Portfolio Risk Q1-7

a25s001t05L05: Diversification, International, Investment Types, Sectors Q1-10

A25s001t05l07: Portfolio  Valuation Q1-12

A25s001t05l10: Hedging Q1-12

A25s001t05l11: Dollar Cost Averaging Q1-11

current economic environment

A20s000t01l01: Economics Intro Q1-14

A20s000t01l02: Domestic Economy Q1-28

A20s000t01l03: The World Economy Q1-12

A20s000t01l04: Economics At The Industry Level Q1-11

roles and operations of financial markets

a20s010t04L00: Financial Markets And Intermediaries Q1-na

A20s010t04l01: Financial Institutions Q1-10

a20s010t04L02: Exchanges Q1-10

a20s010t04L03: Markets Q1-9

a20s010t04L04: Settlement And Clearing Houses Q1-11

a20s010t04L07: Brokers And Intermediaries Q1-9

a20s010t04L08: Fund Managers Q1-10

taxation issues in relation to the products and markets in which they operate

a25s002t02L00: Effects Of Taxation On Particular Financial Products Q1-

a25s002t02L01: Shares Q1-30

a25s002t02L02: Real Estate Q1-30

a25s002t02L03: Interest Bearing Securities Q1-30

a25s002t02L04: Managed Investments Q1-30

a25s002t02L05: Effects Of Taxation On Financial Strategies Of Individuals And Entities Q1-30

a25s002t02L06: Salary Packaging Q1-30

a25s002t02L07: Superannuation Q1-30

a25s002t02L07: Superannuation Q1-na

a25s002t02L08: Fringe Benefits Q1-30

a25s002t02L09: Tax And Fixed Interest Markets Q1-30

a25s002t02L10: Tax And Managed Funds Q1-30

a15s003t01L00: Tax And Securities Q1-na

a15s003t01L01: Imputation Q1-30

a15s003t01L02: Capital Gains Tax Q1-30

a15s003t01L03: Sales Tax Q1-30

a15s003t01L04: Tax And Options Q1-30

a15s003t01L05: Stamp Duty Q1-na

a15s003t01L06: Realising Losses Q1-30

a15s003t01L07: Dividends Q1-na

a15s003t01L08: Employee Options & Share Schemes Q1-30

a15s003t01L09: Offsetting Losses Q1-30

a15s003t01L10: Capital Restructuring Q1-30

risks and implications associated with financial products and services

A15s002t01l00: Securities Risk Q1-na

A15s002t01l01: Volatility Q1-10

a15s002t01L02: Liquidity Q1-na

A15s002t01l03: Short Selling Q1-10

A15s002t01l04: Economic Environment Q1-10

A15s002t01l05: Equities And Industry Sectors Risk Q1-11

A15s002t01l06: Options Q1-10

A15s002t01l07: Futures Risk Q1-10

A15s002t01l08: Margin Loans Q1-10

a15s002t01L09: Hedging Q1-na

A15s002t01l10: Diversification Q1-6

A18s001t01l04: Risks Common To Warrants Q1-9

A19s001t01l06: Options Risks: Consequences Q1-10

A19s001t01l08: Option Risks - Volatility Q1-6

A19s001t01l09: Option Risks - Odds Q1-10

organisational policies and procedures

a40S105t01L13: Record-keeping Requirements Q1-30

a40S105t01L07: Verification of the identity of an existing customer Q1-15

a40s104t01L17: Authorised Representatives Q1-19

a40s104t01L12: Disclosure Q1-20

a40s104t01L13: Conduct Q1-20

a40s104t01L14: Dispute resolution Q1-20

a40s104t01L15: Manging Conflicts of Interest Q1-20

relevant legal principles and disclosure and compliance requirements

a40s104t01L00: Compliance Q1-na

a40s104t01L01: An Introduction to Compliance Q1-15

a40s104t01L02: Legislation Overview - Financial Services Reform Act 2001 Q1-20

a40s104t01L03: Legislation Overview - The Corporate Law Q1-20

a40s104t01L04: Economic Reform Program Q1-20

a40s104t01L05: The Australian Stock Exchange (ASX) Q1-20

a40s104t01L06: Regulators - ASIC Q1-20

a40s104t01L07: Regulators - APRA Q1-20

a40s104t01L08: Implementing Compliance Programs AS3806 Q1-20

a40s104t01L09: Industry Codes of Practice Q1-20

a40s104t01L10: Competency Compliance: ASICs PS146 Q1-15

a40s104t01L11: AFS Licensing Q1-20

a40s104t01L12: Disclosure Q1-20

a40s104t01L13: Conduct Q1-20

a40s104t01L14: Dispute resolution Q1-20

a40s104t01L15: Manging Conflicts of Interest Q1-20

a40s104t01L16: Financial Requirements Q1-19

a40s104t01L17: Authorised Representatives Q1-19

a40s104t01L18: Responsible officers Q1-19

a40s104t01L19: Breach Reporting Q1-20

a40S105t01L01: What is money laundering Q1-10

a40S105t01L02: Existing Laws and the need for change Q1-10

a40S105t01L03: Introduction to the new laws Q1-10

a40S105t01L04: The effect of the new laws Q1-20

a40S105t01L05: Antimoney laundering and counter terrorism financing programs Q1-20

a40S105t01L06: Application of the new laws Q1-20

a40S105t01L07: Verification of the identity of an existing customer Q1-15

a40S105t01L08: Reporting obligations Q1-20

a40S105t01L09: Reporting obligations 2 - transactions and funds transfers Q1-20

a40S105t01L10: Reporting obligations 3 - Compliance reports Q1-15

a40S105t01L11: Electronic Funds Transfer Instructions 1 - Key Concepts Q1-30

a40S105t01L12: Electronic Funds Transfer Instructions 2 - Obligations And Exceptions Q1-30

a40S105t01L13: Record-keeping Requirements Q1-30

types of financial market products and services

A18s001t01l00: Introduction To Warrants Q1-

A18s001t01l01: Types Of Warrants Q1-16

A18s001t01l02: Features Common To All Warrants Q1-13

A18s001t01l03: Benefits Common To All Warrants Q1-20

A18s001t01l04: Risks Common To Warrants Q1-9

A18s001t01l05: Some Factors Affecting The Price Of Warrants Q1-15

A18s001t01l06: Buying Warrants Q1-16

A18s001t01l07: Difference Between Warrants And Options Q1-10

A19s001t01l00: Options Q1-na

A19s001t01l01: Types Of Options Q1-10

A19s001t01l02: Writing And Taking Options Q1-11

A19s001t01l03: Margin Calls Q1-8

A19s001t01l04: Options - The Players Q1-6

A19s001t01l05: Options - The Advantages Q1-5

A19s001t01l06: Options Risks: Consequences Q1-10

A19s001t01l07: Payoff Diagrams Q1-9

A19s001t01l08: Option Risks - Volatility Q1-6

A19s001t01l09: Option Risks - Odds Q1-10

A19s001t01l10: Components Of A Contract Q1-8

A19s001t01l11: Pricing Options Q1-10

A19s031t01l00: Options Strategies Q1-na

A19s031t01l01: Trading Long Calls Q1-10

A19s031t01l02: Writing Naked Calls Q1-9

A19s031t01l03: Writing Covered Calls Q1-8

A19s031t01l04: Protective Put Q1-10

A19s031t01l05: Trading Long Puts Q1-10

A19s031t01l06: Writing Puts Q1-9

A19s031t01l07: Long Straddle Q1-11

A19s031t01l08: Short Straddle Q1-7

A19s031t01l09: Long Strangle Q1-9

A19s031t01l10: Short Strangle Q1-9

A19s031t01l11: Bull Call Spread Q1-8

A19s031t01l12: Bull Put Spread Q1-na

A19s031t01l13: Bear Call Spread Q1-na

A19s031t01l14: Bear Put Spread Q1-na

relationship between ethics and regulatory requirements

a40s104t01L12: Disclosure Q1-20

a40s104t01L13: Conduct Q1-20

a40s104t01L14: Dispute resolution Q1-20

a40s104t01L15: Manging Conflicts of Interest Q1-20

a40s104t01L16: Financial Requirements Q1-19

a40s104t01L17: Authorised Representatives Q1-19

a40s104t01L18: Responsible officers Q1-19

a40s104t01L19: Breach Reporting Q1-20

financial markets risk

A03s001t01l04: Market Risk Q1-10

A03s001t01l05: Market Timing Q1-10

A03s001t01l06: Lack Of Diversification Q1-10

A21s001t03l10: Futures And Risk Q1-10

the economic environment, including:

characteristics and impacts of economic and business cycles

government monetary and fiscal policies

interest rates, exchange rates, inflation

financial market products

A20s000t01l01:Economics Intro Q1-14

A20s000t01l02: Domestic Economy Q1-28

A20s000t01l03: The World Economy Q1-12

A20s000t01l04: Economics At The Industry Level Q1-11

Interpersonal skills

explaining the adviser's role

establishing knowledge level of the client

explaining the services offered

listening actively to what the client is saying/requesting

questioning to clarify and confirm the clients needs

seeking feedback from the client to confirm understanding of needs

Clients

investors

borrowers

traders

importers

exporters

Financial needs

funding

acquisition and disposal of financial assets

interest rate risk management

foreign currency receipts and payments

foreign currency risk management

cash flow management

trading profits

Organisational

requirements

quality assurance and or procedure manuals

business and performance plans

policies and procedures in relation to client services

assess and equity principles and practice guidelines

product or service development

occupational health and safety (OH&S) policies, procedures and programs

goals, objectives, plans, systems and processes

mission statements, strategic plans

legal and organisational policies guidelines

ethical standards, codes of practice

complaints and dispute resolution procedures

quality and continuous improvement processes and standards

Valid and relevant

information

details of clients needs and objectives for income,

security, liquidity and time period

relevant personal, financial and business details

client current and proposed operating environment, assets and systems

client activities and functions

taxation obligations

existing client risk management strategies

cash flows (required and projected)

other client details such as employment security, likely events and their impact on the client, age and other products they have

individual investment preferences and a version or tolerance to risk

Risk to be identified

market risk

credit risk

settlement risk/delivery risk

funding risk

operational risk

legal risk

reputation risk

Assessment criteria

AS/NZS 4360:1999 Risk Management

AFMA's prioritised G30 recommendations for managing derivatives risk

Supply Chain Operations Reference (SCOR)

qualitative factors

quantitative factors

semi-quantitative factors

Vulnerability of financial

products

risk factors and return expectations

market and sector risks (economic cycle, fixed interest)

economic

liquidity risk

borrowing risk/gearing

volatility of income and capital

access restrictions on product

specific product risk

Risk management

alternative

quantification of risks

periodic reporting

referral to decision making authorities

forecasting

comparative analysis

Relevant legislation

Australian Securities and Investments Commission

(ASIC) Act, policy guidelines

legislation and regulations administered by Australian

Prudential Regulation Authority (APRA)

Taxation Acts and regulations

Superannuation Acts and regulations

OH&S legislation

applicable state legislation and regulations

Contract law

industry codes of practice

Corporations Act 2001

Trade Practices Act 1974

Banking Act 1959

Financial Transaction Reports Act 1992

Reserve Bank Act 1959

Privacy Act amendment (Private Sector) 2000

Financial Corporations Act 1974

Commonwealth Criminal Code

Financial Services Reform Act (FSRA) 2001/2

Retail client disclosure

documents

financial services guide

product disclosure statement

statement of advice

Documentation

references to all evidence/information considered

meeting notes

records of telephone conversations

recommendations

advice

reports

legal/government/professional documents

general correspondence

Filing of information

computerised

electronic

manual

other

Area

Training Package Specification

Gryphon Learning Implementation

To achieve competency in this unit, a person must be able to demonstrate:

ability to determine risk profile of client

ability to assess financial risk

ability to report findings

knowledge of organisational requirements

knowledge of risk management alternatives

knowledge of client disclosure documents

knowledge of relevant legislation

accurate assessment of client financial requirements to formulate a strategy to assess client risk

ability to test and assess client strengths and liabilities

ability to assess the impact of risks to the client and the organisation and recommend strategies to control risk

ability to accurately review and prepare risk assessment findings in a format suitable for presentation

ability to provide up to date advice on the risk ands benefits of financial products and/or services

Competence in this unit must be assessed over a period

of time in order to ensure consistency of performance

over the Range Statement and contexts applicable to the work environment.

See assessment items and courseware listed above

This unit may be assessed on its own or it may be

assessed with other units that cover related skills and knowledge.

Evidence is most relevant when provided through an integrated activity, which combines the elements of competency for the unit, or a cluster of units of competency.

This unit will always be assessed with FNSFMKT503B Advise Clients on financial risks and with either FNSASIC503VB Provide Advice in Derivatives or FNSASIC503WB Provide Advice in Derivatives in the context of providing financial advice to clients

For valid and reliable assessment of this unit, evidence

should be gathered through a range of methods to indicate consistent performance.

Assessment of this unit of competence will usually include observation of processes and procedures, oral and/or written questioning on underpinning knowledge and skills and other methods as required.

Assessment involves emailed essays, a range of interactive assessment items comprising both formative and summative assessment. Some of these summative assessments are supervised.

As part of the assessment, information is provided using Audio, Video, text and graphics. Student responses can involve

• Completion of simulated workplace documentation
• Completion of simulated processes
• Responses to multiple choice questions (e.g. clicking on documents to be given to clients)
• Manipulating and organising items on screen
• Responses to True/False questions
• Pointing to significant areas on charts or graphs

Assessment of performance requirements in this unit

should be undertaken within the financial services industry context and should cover aspects of personal/financial responsibility and accountability.

Aspects of competency, including skills, may be assessed

in a relevant workplace, a closely simulated work environment, or other appropriate means that clearly meet industry competency requirements.

See assessment items and courseware listed above.

Under ASIC's Licensing rules, students who have not already demonstrated competency in this unit are not permitted to advise clients. Therefore, the assessment must involve a simulated environment.

This unit of Competency is offered as part of a course which is listed on the ASIC Training Register as Meeting the educational requirements for the minimum requirements for Advising on Derivatives.

To obtain a certificate stating students have met ASIC's requirements, students must demonstrate that they currently have these comptencies. This complicates RPL. See the discussion of RPL in the Gryphon Learning Training Strategies Manual.

Assessment of this unit of competence requires access to suitable opportunities (simulated or real) and resources to demonstrate competence.

Assessment instruments, including personal planner and assessment record book.

Access to a registered provider of assessment services

To complete this unit, students need a computer with adequate internet access. For minimum specifications see the Gryphon Learning Training Strategies Manual.

Most students are currently working in the finance industry (including those employed by Gryphon Learning), and therefore have access to a range of relevant resources (including product documentation.)

Others have accessed such resources from a range of sources, including their financial advisors, by subscription, using the internet and, (under some circumstances, from Gryphon Learning.)