module four

Question 1

Strategic risk

Answer 1

risk created by organisations business strategy

Question 2

Operational risks

Answer 2

major risks stopping an organisation to do its strategic plan

Question 3

Legal risks

Answer 3

regulator risk is the risk of changes to regulations including the potential for fines and penalties.

Question 4

Reputational risk

Answer 4

a threat or danger to the good name or standing of an organisation.

Question 5

Financial risk

Answer 5

arise where there is danger or possibility that the organisation and its shareholders will lose money

Question 6

Credit risk

Answer 6

the risk that borrowers will not repay their loan. Interest rate risk arises from the impact of movements of interest rates

Question 7

Liquidity risk

Answer 7

the risk a bank doesn’t have enough readily available funds to finance its day to day operations

Question 8

Systemic risks

Answer 8

a further risk to the financial sector.

Question 9

Holistic approach

Answer 9

An approach that recognises the affects between risks.

Question 10

Governance and culture

Answer 10

strong risk culture is that everyone’s responsible with the governance setting everyones tone

Question 11

Strategy and objective setting

Answer 11

work together in strategic planning process

Question 12

Performance

Answer 12

risks are identified, assessed and responded to

Question 13

Review and revision

Answer 13

reviewing means organisations can consider risk then can see what needs to be revised.

Question 14

Information, communication and reporting

Answer 14

risk management requires sharing information across the organisation.

Question 15

Credit risk

Answer 15

the risk borrowers wont repay their loan

Question 16

Screening

Answer 16

important to have an understanding of the business

Question 17

Monitoring and controlling

Answer 17

Important for bank to manage risks on all the loans

Question 18

Credit risk management

Answer 18

monitoring and controlling performance of banks to control its risk exposure.

Question 19

Measuring credit risk

Answer 19

Enables lender to calculate likelihood of borrower defaulting on a loan to ensure default rates are kept low

Question 20

Algorithm and machine learning risk

Answer 20

Concerns that algorithms will make decisions alone

Question 21

Strategy and governance

Answer 21

should include: principles, policies, standards, roles, responsibilities, control processes, procedures, appropriate people selection and training

Question 22

Design, development, deployment and use

Answer 22

develop processes aligned with governance structure to address algorithm

Question 23

Monitoring and testing

Answer 23

assess and oversee algorithm data

Question 24

climate change risk

Answer 24

financial system could be damaged and financial stability threatened.

Question 25

Physical risks

Answer 25

direct impacts of climate-related hazards on human and natural systems

Question 26

Transition risks

Answer 26

arise from transition to low carbon economy

Question 27

Liability risks

Answer 27

those who seek compensation for damage due to climate change

Question 28

Standard asset risk

Answer 28

Assets suffered from unanticipated write-downs. Write-down is a term for the reduction of an asset when its ‘fair market value’ has fallen below its book value

Question 29

Physical risk

Answer 29

direct impacts of climate-related hazards on human and natural systems

Question 30

Acute physical risks

Answer 30

driven by an event with a short term impact.

Question 31

Chronic physical risks

Answer 31

arise from gradual, longer-term impacts.

Question 32

Transition risks

Answer 32

Risks that arise from transition to a low-carbon economy including. Risks from development in climate policy, legislation and regulation.

Question 33

Climate policy, legislation and regulation

Answer 33

Charge fees for burning of carbon based fuels

Question 34

Lower-carbon technologies

Answer 34

Occur when new, lower-carbon technologies replace existing

Question 35

Reputation

Answer 35

An organisations reputation could be damaged if associated with high-carbon methods of production and distribution leading to less demand for products and services.

Question 36

Liability risks

Answer 36

The risk that parties who suffered loss or damage from effects of climate change seek compensation from those held responsible

Question 37

Opportunities

Answer 37

Opportunities for financial organisations to get on the right side of low-carbon transition

Question 38

Data compromise

Answer 38

Threat of loss through cyber-attacks which are on the increase posing a major threat to banks and other organisations.

Question 39

IT disruption

Answer 39

this can cause major disruption to a banks internal IT systems.

Question 40

IT failure

Answer 40

risk of failure of banks internal IT systems

Question 41

Vulnerabilities in SS7

Answer 41

allows phone networks to exchange information required for passing calls and texts they can empty customers’ banks by intercepting the messages banks send to customers.

Question 42

Malware

Answer 42

damaging computer systems without the owners knowledge and steal data

Question 43

Ransomware

Answer 43

malicious software designed to deny access to files or threaten to publish victims data unless a ransom is paid.

Question 44

ATM attacks

Answer 44

sofware that ca scan peoples cards and security cameras that can see peoples pin numbers

Question 45

Mobile banking attacks

Answer 45

they can be vulnerable to sophisticated cyber-attacks if they lack the security features necessary.

Question 46

Distributed Denial of Service (DDoS)

Answer 46

a cyber-attack where the hacker seeks to disrupt an originations network services.

Question 47

Insider threats

Answer 47

attacks can come from within an organisations own network.

Question 48

Phishing as a service

Answer 48

a type of fraud where a cybercriminal pretends to be a reputable organisation or person. They can use phishing emails to distribute malicious links or attachments designed to obtain their login details or account information

Question 49

Spear-phishing

Answer 49

a more targeted attempt at individuals to steal account information from a specific victim.