Operational Risk Management
Financial Risk and Regulation Series
Review Questions
Chapter 2
Operational Risk: Identification and Assessment
Review Question 1: Operational Risk Chapter 2
Q What is the starting point to managing operational risk?
A
a. Measurement.
b. Mitigation.
c. Identification.
d. Assessment.
Review Question 1: Operational Risk Chapter 2 Answer
Q What is the starting point to managing operational risk?
A
a. Measurement.
b. Mitigation.
c. Identification.
d. Assessment.
Review Question 2: Operational Risk Chapter 2
Q The risk that is introduced as a direct result of a control
implemented as a risk mitigation technique is known as
what?
A
a. Subsequent risk.
b. Inherent risk.
c. Residual risk.
d. Secondary risk.
Review Question 2: Operational Risk Chapter 2 Answer
Q The risk that is introduced as a direct result of a control
implemented as a risk mitigation technique is known as
what?
A
a. Subsequent risk.
b. Inherent risk.
c. Residual risk.
d. Secondary risk.
Review Question 3: Operational Risk Chapter 2
Q Bank E is upgrading one of its core systems and as a
precaution prior to the upgrade, it backs-up the old system.
This is so it can revert to the old system if there is a
problem with the upgrade. Due to a programming error in
the new system the upgrade fails. Bank E attempts to revert
to the old system only to find that the back-up has failed
A
due to a hardware fault. What kind of control failure is this?
a. Cascading control failure.
b. Escalating control failure.
c. Oblique control failure.
d. Cyclical control failure.
Review Question 3: Operational Risk Chapter 2 Answer
Q Bank E is upgrading one of its core systems and as a
precaution prior to the upgrade, it backs-up the old system.
This is so it can revert to the old system if there is a
problem with the upgrade. Due to a programming error in
the new system the upgrade fails. Bank E attempts to revert
to the old system only to find that the back-up has failed
A
due to a hardware fault. What kind of control failure is this?
a. Cascading control failure.
b. Escalating control failure.
c. Oblique control failure.
d. Cyclical control failure.
Review Question 4: Operational Risk Chapter 2
Q Bank D approves a loan of AUD 100,000.00 to one of its
customers. A member of staff in the processing team
accidentally transfers AUD 1,000,000 into the customer’s
account. Later that day the customer informs the bank of its
error and all funds are recovered by the bank with no loss.
What kind of operational risk event has Bank D suffered?
A a. Near miss event.
b. Gain event.
c. Neutral event.
d. Bank D has not suffered an operational risk event as there
was no loss.
Review Question 4: Operational Risk Chapter 2 Answer
Q Bank D approves a loan of AUD 100,000.00 to one of its
customers. A member of staff in the processing team
accidentally transfers AUD 1,000,000 into the customer’s
account. Later that day the customer informs the bank of its
error and all funds are recovered by the bank with no loss.
What kind of operational risk event has Bank D suffered?
A a. Near miss event.
b. Gain event.
c. Neutral event.
d. Bank D has not suffered an operational risk event as there
was no loss.
Review Question 5: Operational Risk Chapter 2
Q An RCSA is distinguished from both control assessments
and risk and control assessments because it?
A
a. Is conducted by a third party.
b. Tests a control’s effectiveness score.
c. Is subjective by nature.
d. Includes a risk assessment in addition to a control
assessment.
Review Question 5: Operational Risk Chapter 2 Answer
Q An RCSA is distinguished from both control assessments
and risk and control assessments because it?
A
a. Is conducted by a third party.
b. Tests a control’s effectiveness score.
c. Is subjective by nature.
d. Includes a risk assessment in addition to a control
assessment.
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