Operational Risk

Question 1

Which operational risk category does this example belong to?

Documentation

Answer 1

Internal process Risk

Question 2

Which operational risk category does this example belong to:

Lack of control

Answer 2

Internal process Risk

Question 3

Which operational risk category does this example belong to:

Marketing error

Answer 3

Internal process Risk

Question 4

Which operational risk category does this example belong to:

Misseling

Answer 4

Internal process risk

Question 5

Which operational risk category does this example belong to:

Money laundering

Answer 5

Internal process risk

Question 6

Which operational risk category does this example belong to:

Transaction error

Answer 6

Internal process risk

Question 7

Which operational risk category does this example belong to:

Insufficient/ incorrect reporting

Answer 7

Internal process risk

Question 8

Which operational risk category does this example belong to:

Health/ safety issues

Answer 8

People risk

Question 9

Which operational risk category does this example belong to:

High staff turnover

Answer 9

People risk

Question 10

Which operational risk category does this example belong to:

Internal fraud

Answer 10

People risk

Question 11

Which operational risk category does this example belong to:

Labor disputes

Answer 11

People risk

Question 12

Which operational risk category does this example belong to:

Poor management practices

Answer 12

People risk

Question 13

Which operational risk category does this example belong to:

Poor staff training

Answer 13

People risk

Question 14

Which operational risk category does this example belong to:

Over reliance on key staff

Answer 14

People risk

Question 15

Which operational risk category does this example belong to:

Activities of rogue trader

Answer 15

People risk

Question 16

Which operational risk category does this example belong to:

Data corruption

Answer 16

Systems risk

Question 17

Which operational risk category does this example belong to:

Data entry error

Answer 17

Systems risk

Question 18

Which operational risk category does this example belong to:

Inadequate change control

Answer 18

Systems risk

Question 19

Which operational risk category does this example belong to:

Inadequate project control

Answer 19

Systems risk

Question 20

Which operational risk category does this example belong to:

Programming error

Answer 20

Systems risk

Question 21

Which operational risk category does this example belong to:

Reliance on black box technology

Answer 21

Systems risk

Question 22

Which operational risk category does this example belong to:

Service interruption

Answer 22

Systems risk

Question 23

Which operational risk category does this example belong to:

System security issues

Answer 23

System risks

Question 24

Which operational risk category does this example belong to:

System suitability

Answer 24

System risks

Question 25

Which operational risk category does this example belong to: Use of new untried technologies

Answer 25

System risk

Question 26

Which operational risk category does this example belong to: Events at other banks

Answer 26

External events

Question 27

Which operational risk category does this example belong to: External fraud/ theft

Answer 27

External risk

Question 28

Which operational risk category does this example belong to: Fire, natural disasters

Answer 28

External events

Question 29

Which operational risk category does this example belong to: Failure of outsourcing arrangements

Answer 29

External risk

Question 30

Which operational risk category does this example belong to: Implementation of new regulations

Answer 30

External risk

Question 31

Which operational risk category does this example belong to: Riots/ protests/ terrorism

Answer 31

External risk

Question 32

Which operational risk category does this example belong to: Transport system interruption / utility service failure

Answer 32

External risk

Question 33

Which operational risk category does this example belong to: Kyc regulation+ privacy regulations

Answer 33

Legal risk

Question 34

What is the Basel 2 definition of operational risk?

Answer 34

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

Question 35

What risks are excluded from Basel 2 definition of operational risk?

Answer 35

Reputational, strategic and business risk.

Question 36

What is limitation of Basel 2 definition of operational risk?

Answer 36

Not accounting for Near misses

Question 37

Why has there been a recent increase in operational risk?

Answer 37

Reliance on technology (automation), globalization (outsourcing) , terrorism, rogue traders, litigation.

Question 38

How do you calculate expected losses ?

Answer 38

Average of all historical losses over a period of time.

Question 39

How do you calculate unexpected losses?

Answer 39

Internal data, other banks data, data from operational risk scenarios