1. Compute the difference between these risk using the ANOVA and Kruskal-Wallis.

Compare the results.

Bartlett’s test is use to test the

4.5
4 homogeneity of variances. It is the pre-test in
standard deviation

3.5
3 identifying which method will be used either
2.5
2
1.5
Kruskal-Wallis or Welch’s Anova. Based on
1
0.5 figure 1, it shows that the standard deviation has
0
0 5 an equal variability, thus, Kruskal-Wallis and
mean of transformed data
ANOVA is used in comparing the three (3) risk
Figure 1. Bartlett's test for associate in Wells Fargo.
homogeneity of variances

Table 1. ANOVA and Kruskal-Wallis Methods

METHOD P-VALUE

ANOVA 0.999548

Kruskal-Wallis 0.047

On running the ANOVA and Kruskal-Wallis on the top three (3) risks of Wells

Fargo, the Operational, Credit and Market Risk, the following results in Table 1

were obtained. If the p-value is less than the significance level ɑ (alpha) = 0.05,

the null hypothesis (Ho) shows that there is a significant difference in the top three

(3) risk identified otherwise, no significant difference was detected.

 Coming from the top three (3) risk data of Wells Fargo, results found in

ANOVA. The ANOVA test statistic p-value (p=0.999548) reveals that there is no

significant difference in the Operational, Credit and Market Risk. An implication

that Norton will not give special action or attention to the top three (3) identified

risks in Wells Fargo.

However, Kruskal-Wallis as the confirmatory test shows different results.

Based on the Kruskal-Wallis’ p-value (p=0.47), it is evident that the top three (3)

risks identified by Norton were significantly different with each other. Thus, Norton

has to give special attention or action to the three (3) risks – Operational, Credit

and Market.

2. Which risk should Norton give an immediate attention? Why?

Table 2. ANOVA RESULTS

Groups Count Sum Average Variance

Operational risk 18 479.00 26.611111 382.251634

Credit risk 18 475.40 26.411111 2,760.55046

Market risk 18 472.00 26.222222 1,379.24183

Kruskal-Wallis result shows that Norton should give immediate attention or

action to the top three (3) identified risks specially to the Credit Risk because based

on the ANOVA variation results credit risk has the highest variation among the top

three (3) identified risks by Norton.

 There are quite few things that have to be taken into account when dealing

with credits. This should be considered by Wells Fargo. This risk could result Wells

Fargo’s financial loss and negative impression which could lead to certain negative

results in the future if credit risk were treated badly and can lead to bankruptcy.

Thus, Norton should make some plan of action in mitigating this risk by assessing

the financial condition and performance of the business.