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CISI-Managing Operational Risk in Financial Institutions
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Question 1 of 10
1. Question
To determine the capacity of a company to use its own procedures and methodologies to evaluate substantial transition of risk, the FCA’s analysis of approval would concentrate on:
Correct
An awareness by the company of the probability of any potential approval transactions, including possible underlying assets, securitisation processes and other related factors relating to the economic transfer of risk.
Incorrect
An awareness by the company of the probability of any potential approval transactions, including possible underlying assets, securitisation processes and other related factors relating to the economic transfer of risk.
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Question 2 of 10
2. Question
When part of a firm’s continuing risk management analysis, the FCA wants it to recognize the assistance it has provided to securitisation transactions. Pick out the incorrect statement.
Correct
If it is revealed that a company has funded a securitisation, it will raise the probability that the firm will have further funding for its securitisations.
Incorrect
If it is revealed that a company has funded a securitisation, it will raise the probability that the firm will have further funding for its securitisations.
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Question 3 of 10
3. Question
Generally speaking, the size of the premium paid will not significantly impact the determination of whether there has been a significant risk transition. This is because:
Correct
The automatic compensation from protection vendor to security buyer shall be considerably higher than the total premium payable to protection vendor.
Incorrect
The automatic compensation from protection vendor to security buyer shall be considerably higher than the total premium payable to protection vendor.
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Question 4 of 10
4. Question
Pick out the incorrect statement regarding the liquidity risk management.
Correct
The plans, procedures, processes and structures need to be consistent with the size, risk level and operational environment of the organization, and the liquidity risk threshold defined by the regulatory body of the organization.
Incorrect
The plans, procedures, processes and structures need to be consistent with the size, risk level and operational environment of the organization, and the liquidity risk threshold defined by the regulatory body of the organization.
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Question 5 of 10
5. Question
Which of the statement actually portrays the governing body and senior management’s legitimate position about liquidity risk tolerance?
Correct
A corporation must guarantee that its appetite for liquidity costs is relevant to its corporate plan and represents its financial environment and financing capability.
Incorrect
A corporation must guarantee that its appetite for liquidity costs is relevant to its corporate plan and represents its financial environment and financing capability.
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Question 6 of 10
6. Question
A company will insure that it correctly quantifies capital expenses, benefits and risks in relation to all significant business practices and thoroughly translates them into:
Correct
A organization must ensure that in relation to all significant operating activities it accurately quantifies capital costs, benefits and risks and systematically integrates them into calculating the outcomes and opportunities.
Incorrect
A organization must ensure that in relation to all significant operating activities it accurately quantifies capital costs, benefits and risks and systematically integrates them into calculating the outcomes and opportunities.
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Question 7 of 10
7. Question
A company will make sure its liquidity risk management strategies are:
Correct
A company will ensure that its liquidity threat management strategies allow for proper updating of its estimate of usable leverage to compensate for assets that form part of a linked hedge.
Incorrect
A A company will ensure that its liquidity threat management strategies allow for proper updating of its estimate of usable leverage to compensate for assets that form part of a linked hedge.
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Question 8 of 10
8. Question
Choose the statement that rightly defines operational risk.
Correct
Danger of failure due to incomplete or inappropriate organizational procedures, entities and systems or external incidents shall be referred to as operating danger.
Incorrect
Danger of failure due to incomplete or inappropriate organizational procedures, entities and systems or external incidents shall be referred to as operating danger.
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Question 9 of 10
9. Question
Point out the incorrect statement from the given claims regarding operational risk.
Correct
Advanced banking institutions are supposed to use a more sophisticated approach than a basic predictor tool that is suitable for the risk profile of the institution.
Incorrect
Advanced banking institutions are supposed to use a more sophisticated approach than a basic predictor tool that is suitable for the risk profile of the institution.
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Question 10 of 10
10. Question
A bank may use an AMA for certain sections of its operations and the Simple Indicator Method or Uniform Balance Approach (partial usage), providing the following conditions are fulfilled:
Correct
The bank submits a timeline to its manager detailing the timeframe it expects to carry out the AMA in all but an immaterial portion of its operations. The approach would be guided, not by other reasons, by the practicality and feasibility of the transition to the AMA over time.
Incorrect
The bank submits a timeline to its manager detailing the timeframe it expects to carry out the AMA in all but an immaterial portion of its operations. The approach would be guided, not by other reasons, by the practicality and feasibility of the transition to the AMA over time.