Past Exam

Question 1

A Key Reason why Risk Management should be extended throughout a project is because

Answer 1

Reduces likelihood of unexpected outcomes

Question 2

ERM compares what two factors

Answer 2

Risk profile and exposure

Question 3

Maturity Ladders enable specific analysis of ?

Answer 3

Cash Flow

Question 4

What is the difficulty with analysing the factors affecting a certain risk type

Answer 4

Lack of Data

Question 5

External and internal risks often are address simultaneously as:

Answer 5

They often overlap

Question 6

A firm is found in breach of a principles based framework – What action will be taken by the regulator?

Answer 6

License revoked

Question 7

What is the ratio of capital adequacy laid out in the Basel principles?

Answer 7

Leverage Ratio

Question 8

What Determines liquidity Risk within a Firms assets:

Answer 8

Marketability

Question 9

Loss casual Analysis covers what?

Answer 9

Root Causes of risk

Question 10

Lessons learned from an Operational Risk events should be:

Answer 10

use to update operational risk policy

Question 11

A Graphical representation of operational risk losses will tend to:

Answer 11

Exhibit Fat Tails

Question 12

What type of risk affects the price of options:

Answer 12

Volatility

Question 13

Asset allocation involves what?

Answer 13

To reduce risk via diversification

Question 14

Which Measure is used to determine funding requirements at different confidence levels?

Answer 14

Liquidity at risk

Question 15

Effective market risk function should monitor P&L at least once a:

Answer 15

Day

Question 16

BIS require the public disclosure of :

Answer 16

Org Structure

Question 17

A typical investment mandate must include the details of:

Answer 17

Tracking error

Question 18

How does Interest Rate risk and commodity price risk interact:

Answer 18

Nothing Happens

Question 19

What is an example of a market risk limit?

Answer 19

• Stop/loss

Question 20

What boundary issues cause issues in credit risk:

Answer 20

• internal processes

Question 21

What are the advantages of VaR?

Answer 21

• Common Comparison standard across all asset classes

Question 22

What is the best way to ensure a model is accurate

Answer 22

• implementing the output of a model and (ii) being able to assess the value of that implementation, the easier it is to gauge the model’s accuracy

Question 23

Which analysis is used to estimate normal growth in new deposit accounts?

Answer 23

Behavioral Analysis

Question 24

Key benefits of a well constructed risk model are

Answer 24

Competitive advantage and makes quicker decision making and can automate complex methods

Question 25

How can a Uk investor in a UK business be exposed to currency risk?

Answer 25

UK companies offer products to foreign nations and clients

Question 26

How can joining an industry group typically help a new firm mitigate risk?

Answer 26

It Gives better regulation

Question 27

KRI’s help a firm anticipate problems by?

Answer 27

Allowing Trends to be monitored

Question 28

Best way to address risk with a self-certification method?

Answer 28

Risk workshops with key staff

Question 29

What does Ex-post mean in relevance to tracking error? Or What is Ex-post?

Answer 29

The bell curve shape and has predictive properties

Question 30

Variance calculation

Answer 30

- 16.24

Question 31

Which measurement is used to determine gross value/amount a bank is exposed to in the future at a point of potential default:

Answer 31

Exposure at default EAD

Question 32

Which Risk affects options value

Answer 32

Volatility

Question 33

Credit exposure is often undermined by an over-reliance on:

Answer 33

Notional estimates

Question 34

Operational Risk procedures policy needs to consider what factor:

Answer 34

Roles and responsibilities

Question 35

What type of external risk is most likely to be reduced/mitigated by building relationships at senior levels?

Answer 35

Stakeholder risk

Question 36

What is the main reason for carrying out an initial currency offering in a crypto asset?

Answer 36

Raise Capital

Question 37

1st line of risk management defence is:

Answer 37

Business manager

Question 38

2nd line of risk management is:

Answer 38

An independent risk function (including compliance)

Question 39

3rd line of risk management defence is:

Answer 39

internal audit

Question 40

A financial Firm has landed a new business deal and only considered financial regulations. It is at risk of:

Answer 40

Losing existing staff

Question 41

The validity of modelling in predicting maximum loss maybe comprised to and over reliance on:

Answer 41

Confidence level

Question 42

What boundary issues cause issues in market risk:

Answer 42

Price Level Risk

Question 43

How often does BIS suggest credit risk reviews take place?

Answer 43

Annually

Question 44

Using historical Simulation how would you calculate VaR?

Answer 44

Apply past factors to current prices

Question 45

What is the benefit of using stature based regs over principle based frameworks?

Answer 45

It is more simple to interpret the rules

Question 46

In a market Dislocation event what happens to the prices of housing?

Answer 46

They Fall

Question 47

After a business process is altered/changed at bank settlements, what is the first operation risk process that is required by the firm/bank?

Answer 47

Review/ assess risk control structure

Question 48

What are the key weaknesses of Risk modelling?

Answer 48

Model due to its various shortcomings, approximations and uncertainties limitations are also a consequence of assumptions underlying

Question 49

Which of the following is evidence of impairment

Answer 49

A breach of Contract

Question 50

According to BIS, a firms exposure to interest rate risk is typically indicated by

Answer 50

The Overall structure of its balance sheet

Question 51

Typical investment mandate includes max level of

Answer 51

Tracking error