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Managing Operational Risk in Financial Institutions
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Question 1 of 10
1. Question
The following are Strategic areas insurers need to consider in developing effective business models in response to the challenging and rapidly changing business environment except one
Correct
Please note that exploring other forms of businesses to increase their capital base is not a strategy Insurers should employ in response to the challenging and rapidly changing business environment
Incorrect
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Question 2 of 10
2. Question
In light of the current challenges, retail banks need to focus on their strengths. What core strength define a banks business model?
Correct
The real secret of developing a customer-centric supply chain is to translate the needs you’ve identified into changes you can make to the supply chain to focus on customer outcomes.
Incorrect
The real secret of developing a customer-centric supply chain is to translate the needs you’ve identified into changes you can make to the supply chain to focus on customer outcomes.
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Question 3 of 10
3. Question
What was the purpose of the Glass-Steagall Act enacted in 1933?
Correct
The Act increased trust in the banks as depositors’ funds were safe as a result of the kind of investments that were done. This brought about a segmentation between investment banking from retail banking
Incorrect
The Act increased trust in the banks as depositors’ funds were safe as a result of the kind of investments that were done. This brought about a segmentation between investment banking from retail banking
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Question 4 of 10
4. Question
Since business risk can happen in multi-faceted ways, what are the different types of risks businesses face? (Select all that applies)
Correct
Businesses face all kinds of risks, that can could serious loss of profits or even bankruptcy. The main types of risk your businesses may face include strategic risk, compliance risk, operational risk, financial risk, and reputational risk.
Incorrect
Businesses face all kinds of risks, that can could serious loss of profits or even bankruptcy. The main types of risk your businesses may face include strategic risk, compliance risk, operational risk, financial risk, and reputational risk.
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Question 5 of 10
5. Question
Business risk can be measured using ratios that fit the situation a business is in, what indices could be used to measure out how much sales is needed to increase profit?
Correct
Contribution margin is a product’s price minus all associated variable costs, resulting in the incremental profit earned for each unit sold. The total contribution margin generated by an entity represents the total earnings available to pay for fixed expenses and to generate a profit
Incorrect
Contribution margin is a product’s price minus all associated variable costs, resulting in the incremental profit earned for each unit sold. The total contribution margin generated by an entity represents the total earnings available to pay for fixed expenses and to generate a profit
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Question 6 of 10
6. Question
What two steps can a business take to reduce its risk exposure? (Select all that applies)
Correct
To reduce its risk exposure the services of a consultant would be needed to review your systems and investigate the weaknesses, if any, with your company’s processes. An outsider who will be able to give the right judgement when it comes to viewing the operations of the business and will also provide unbiased opinions that will help the higher officials to look after and identify areas for improvement more effectively and Internal control staff that will perform regular checks and balances for every single aspect of the company, especially with regards to safety issues for the employees.
Incorrect
To reduce its risk exposure the services of a consultant would be needed to review your systems and investigate the weaknesses, if any, with your company’s processes. An outsider who will be able to give the right judgement when it comes to viewing the operations of the business and will also provide unbiased opinions that will help the higher officials to look after and identify areas for improvement more effectively and Internal control staff that will perform regular checks and balances for every single aspect of the company, especially with regards to safety issues for the employees.
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Question 7 of 10
7. Question
Off-balance sheet financing refers to an arrangement in which a business obtains funds or equipment from external sources but does not report the transaction as an asset or a liability on its balance sheet. What is the advantage of off-balance-sheet financing?
Correct
When a business takes on a new loan, it increases its debt burden. With off-balance-sheet financing, the business obtains the funds or items it needs without affecting its debt burden. Since the business has a maximum amount of funds it can borrow, off-balance-sheet financing gives the business the ability to use its remaining allowable borrowing capacity for other purposes.
Incorrect
When a business takes on a new loan, it increases its debt burden. With off-balance-sheet financing, the business obtains the funds or items it needs without affecting its debt burden. Since the business has a maximum amount of funds it can borrow, off-balance-sheet financing gives the business the ability to use its remaining allowable borrowing capacity for other purposes.
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Question 8 of 10
8. Question
The balance sheet is the most important of the three main financial statements used to illustrate the financial health of a business, what are the other two? (Select all that applies)
Correct
A balance sheet is a statement of the financial position of a business that lists the assets, liabilities and owner’s equity at a particular point in time, it shows the business’s net worth. The balance sheet is the most important of the three main financial statements used to illustrate the financial health of a business. The other two are: The income statement, which shows net income for a specific period of time, such as a month, quarter, or year. The cash flow statement shows the movements of cash and cash equivalents in and out of the business.
Incorrect
A balance sheet is a statement of the financial position of a business that lists the assets, liabilities and owner’s equity at a particular point in time, it shows the business’s net worth. The balance sheet is the most important of the three main financial statements used to illustrate the financial health of a business. The other two are: The income statement, which shows net income for a specific period of time, such as a month, quarter, or year. The cash flow statement shows the movements of cash and cash equivalents in and out of the business.
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Question 9 of 10
9. Question
About 1.5 million staff in 180 countries have absorbed the regulatory intelligence and are managing regulatory change initiatives that are powered by CUBE. What is the four-step methodology for monitoring compliance status and managing regulatory change?
Correct
An effective approach to the regulatory change management process involves a high level of engagement and coordination among compliance professionals. A step-by-step overview of the activities involved in each part of the compliance process can help organizations establish a clear focus of what is required of them – both individually and collectively – leading to a more identifiable path to ensuring compliance and creating opportunity.
Incorrect
An effective approach to the regulatory change management process involves a high level of engagement and coordination among compliance professionals. A step-by-step overview of the activities involved in each part of the compliance process can help organizations establish a clear focus of what is required of them – both individually and collectively – leading to a more identifiable path to ensuring compliance and creating opportunity.
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Question 10 of 10
10. Question
When the economy becomes unstable, small businesses often feel the effects first. Similarly, changes within a small business’s industry, such as a new competitor or weaker demand, may cause its profits or productivity to decrease. In such cases, a small business may try to restructure its operations to improve efficiency or prevent the company from failing. What advantage does restructuring create?
Correct
Restructuring is a procedure in which a business changes the strategy or direction of its organization such as reassignment or alteration of duties within the organization to improve performance or incorporate new technologies.
Incorrect
Restructuring is a procedure in which a business changes the strategy or direction of its organization such as reassignment or alteration of duties within the organization to improve performance or incorporate new technologies.