Chapter 3

Question 1

Operational Risk

Answer 1

The Risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

Question 2

What does the Basel Committee require banks to do

Answer 2

Hold capital for op risk

Question 3

What is a workplace Safety Operational Risk Event

Answer 3

Personal Injury Claim
Health and Safety Fines

Question 4

Improper Dissemination

Answer 4

Giving out misleading information about an investment or issuer of an investment purposely

Question 5

What provisions are used for AMLCTF

Answer 5

KYC
Record keeping of activity
Report suspicious activity

Question 6

How can operational risk cause reputational risk

Answer 6

If clients or media become aware of the issue it can tarnish the firms reputation

Question 7

How does segregation of duties reduce ops risk

Answer 7

If an employee has access to multiple areas of the business they can cover up losses and skirt in place risk mechanisms

Question 8

How does a centralized independent risk department help

Answer 8

It works with other departments to improve controls and maintain op risk systems and framework
Ensures there are no ownerless areas of the bank for escalation, Analysis, Oversights etc

Question 9

Reducing likelihood of a risk materializing

Answer 9

Identify Risk
Ownership of the risk is clear
set up risk indicators