THINGS I GOT WRONG Flashcards
What is the effect that occurs when there is not a suitable risk culture and staff act independently?
Silo
What does a risk manager do?
Measure and report risk within the risk governance structure
What is the CRO responsible for?
Ensuring that the firm’s risks can be successfully managed within the structure it has in place.
When does a firm need to be mindful of gaps in risk governance structure?
Following the takeover of a competitor
How does the Basel Committee seek to achieve its aims?
Setting minimum standards for regulation and supervision
What is moral hazard?
Depositors become complacent about a banks viability due to measures to prevent bank collapse.
What is the purpose of Pillar 3 of the Basel Accord?
Market Discipline
Which type of risk is excluded from the Basel Committee definition of operational risk?
Reputational
What does a portfolio’s alpha measure?
Outperformance relative to its benchmark
What information do firms provide for Pillar II of the Basel Accord?
The quality of the controls’ infrastructure
What is important if risks are aggregated in ERM?
Consistent confidence levels and time frames
What actions should a firm take to mitigate the risk of dirty money?
Keep adequate records
What is moral hazard?
The possibility that people will act differently when they are protected from the effects of the risk that they take.
A short-dated government bond is used to calculate what?
Sharpe ratio
How does the introduction of the Senior Managers Regime affect regulated firms?
Firms have to map out the management responsibilities of staff in senior management functions
