Week 7 Flashcards
(20 cards)
What is the definition of operational risks in cryptocurrencies?
The potential losses arising from inadequate or failed internal processes, people, systems, or external events.
What are the two types of keys used in public-key cryptography for cryptocurrencies?
Public key (shared) and private key (secret).
What is the blockchain in relation to cryptocurrencies?
A shared public ledger containing a record of all transactions, formed from mined blocks which verify transactions or mine new coins.
What is transaction irreversibility in cryptocurrencies?
Once confirmed, transactions cannot be undone, potentially leading to losses in case of errors or fraud.
What is a key vulnerability related to decentralized governance in cryptocurrencies?
Lack of central authority, making the system vulnerable to coordinated attacks.
What is a major external fraud risk in cryptocurrencies?
Theft and fraud, particularly hacking attacks and information theft from virtual wallets and exchanges.
What is a key internal fraud risk in cryptocurrencies?
Theft and misappropriation of assets, particularly stealing private keys.
What is a primary business disruption risk in cryptocurrencies?
Software failures arising from software upgrades or bugs, potentially causing transaction verification failures.
What are the three key elements of crisis communication strategies?
Regret (acknowledge the issue), Reason (explain what happened), Remedy (outline steps to resolve and prevent recurrence).
What is resilience in the context of operational risk management?
The capacity to recover quickly from difficulties or return to a good condition.
What are the two types of reputation risk?
Reputation built on past behavior, and reputation impacted by operational incidents.
What are the three key qualities for effective crisis management?
Speed (respond quickly), Competence (use right specialists), Transparency (maintain openness and honesty).
What are the two main types of crisis response teams?
Technical team (focuses on restoring normal processes) and Communication team (manages media and stakeholder communications).
Why is anonymity considered a risk factor in cryptocurrencies?
It poses risks of money laundering and fraud, and makes tracking identities difficult.
What is a major risk associated with private keys in cryptocurrencies?
Loss or theft of private keys leading to permanent loss of funds.
What is the relationship between resilience and reputation?
A strong reputation provides foundation for resilience, while resilience during crises reinforces and preserves reputation.
What is the main benefit of a good reputation according to the material?
Higher sales, more referrals, competitive advantage, and attraction of top talent.
What are the primary drivers of reputation in the financial industry?
Regulatory compliance and transparency, product quality and customer satisfaction, and investor expectations of financial performance.
What is now considered the top operational risk according to the material?
Cybercrime, due to increased data volume and complexity.
What technological advancements are mentioned for future risk management?
AI, big data, and blockchain technology for improved risk prediction, transparency, and security.
