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CISI-Managing Operational Risk in Financial Institutions
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Question 1 of 10
1. Question
Select the correct statement about the risk aware culture.
Correct
Creating a risk aware culture suggests that the capability is present throughout the organization and it is woven into the normal routines, rituals, and behaviors of all those involved.
Incorrect
Creating a risk aware culture suggests that the capability is present throughout the organization and it is woven into the normal routines, rituals, and behaviors of all those involved.
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Question 2 of 10
2. Question
Three key points to bear in mind when you develop a risk-conscious culture within your do not include:
Correct
Three key points to note when building a risk-conscious culture inside you do not include the fact that risk management by managers is about creating obstacles to policy and procedures development and execution.
Incorrect
Three key points to note when building a risk-conscious culture inside you do not include the fact that risk management by managers is about creating obstacles to policy and procedures development and execution.
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Question 3 of 10
3. Question
Operational risk management’s primary goal is to:
Correct
Ensure risk control is a guiding factor behind the strategy embraced by TBC Bank. Risk staff have evidence of feasibility by identifying the threats and monitoring the accomplishment of the goals. Identification and appropriate risk assessment, as well as risk control strategies, help to generate expected returns and goals.
Incorrect
Ensure risk control is a guiding factor behind the strategy embraced by TBC Bank. Risk staff have evidence of feasibility by identifying the threats and monitoring the accomplishment of the goals. Identification and appropriate risk assessment, as well as risk control strategies, help to generate expected returns and goals.
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Question 4 of 10
4. Question
Which of the following risks arise as a result of potential market interest rate changes that may adversely affect the value of TBC’s financial assets and obligations? This risk can arise from the maturity disparities of assets and liabilities, as well as from the characteristics of repicing these assets and liabilities.
Correct
Interest Rate Exposure results from possible increases in market interest levels that may negatively impact the valuation of TBC’s capital assets and liabilities. Such possibility can emerge from the maturities of the assets and liabilities, as well as from the reprising characteristics of certain assets and liabilities.
Incorrect
Interest Rate Exposure results from possible increases in market interest levels that may negatively impact the valuation of TBC’s capital assets and liabilities. Such possibility can emerge from the maturities of the assets and liabilities, as well as from the reprising characteristics of certain assets and liabilities.
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Question 5 of 10
5. Question
Strong and independent risk management system allows highly skilled practitioners, with a diverse combination of expertise in the bank. Cross-risk practices such as cross-risk reporting, analysis and monitoring, capital adequacy, and stress testing are effectively sponsored. It functions and drives the risk culture of the Banking and real sectors, in local and foreign markets, to perform the necessary risk management functions within the second line of defence.The key areas in which risk management system are facilitation in risk policy and risk tolerance setting and monitoring?
Correct
Enterprise Risk Management: The core areas of the enterprise risk management framework are risk strategy and risk appetite setting and monitoring facilitation. The centralised ERM efficiently supports cross-risk activities such as cross-risk reporting, aggregation and analytics, capital adequacy and stress-testing. The ERM function also drives the Bank’s risk culture.
Incorrect
Enterprise Risk Management: The core areas of the enterprise risk management framework are risk strategy and risk appetite setting and monitoring facilitation. The centralised ERM efficiently supports cross-risk activities such as cross-risk reporting, aggregation and analytics, capital adequacy and stress-testing. The ERM function also drives the Bank’s risk culture.
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Question 6 of 10
6. Question
A liquidity risk management strategy must have as its key objectives:
Correct
Ensure that funds are sufficient to satisfy demands resulting from overall obligations and off-balance sheet responsibilities, both current and contractual, at an economic price, recognise any structural mismatch existing within one’s statement of financial position and set monitoring ratios to manage funding in line with the Bank’s well-balanced growth and monitor liquidity and funding on an ongoing basis to ensure that approved business targets are met without compromising one’s risk profile.
Incorrect
Ensure that funds are sufficient to satisfy demands resulting from overall obligations and off-balance sheet responsibilities, both current and contractual,at an economic price, recognise any structural mismatch existing within one’s statement of financial position and set monitoring ratios to manage funding in line with the Bank’s well-balanced growth and monitor liquidity and funding on an ongoing basis to ensure that approved business targets are met without compromising one’s risk profile.
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Question 7 of 10
7. Question
A variety of policies, processes and procedures are in effect to track and mitigate operational content threats May not involve the introduction of guidelines to improve product weaknesses and take appropriate measures to deter large losses from repeating.
Correct
A variety of policies, processes and procedures are in effect to track and mitigate operational content threats May not involve the introduction of guidelines to improve product weaknesses and take appropriate measures to deter large losses from repeating.
Incorrect
“Implementation of protocols to strengthen program vulnerabilities and take corrective steps to prevent major losses from happening again” is incorrect.
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Question 8 of 10
8. Question
In accordance to FCA, risk management is designed to:
Correct
It is designed to identify the main risks to our objectives as they arise, measure the importance of the risk mitigate risks and monitor the progress of the risk.
Incorrect
It is designed to identify the main risks to our objectives as they arise, measure the importance of the risk mitigate risks and monitor the progress of the risk.
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Question 9 of 10
9. Question
Risk management does not necessarily encompass:
Correct
Risk assessment does not automatically take action to monitor or raise risk exposures and disclose cost and capital risks to senior management and the board of directors. Instead, they assess (where possible) exposure to these uncertainties to ensure effective capital planning.
Incorrect
Risk assessment does not automatically take action to monitor or raise risk exposures and disclose cost and capital risks to senior management and the board of directors. Instead, they assess (where possible) exposure to these uncertainties to ensure effective capital planning.
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Question 10 of 10
10. Question
Of the statements specifically define Operational Risk Management Fundamentals?
Correct
Banks must develop, implement and retain a system that is thoroughly implemented into the bank’s overall risk management processes. The operational risk management program selected by a bank will depend on a variety of variables, including their architecture, size, sophistication and risk profile.
Incorrect
Banks must develop, implement and retain a system that is thoroughly implemented into the bank’s overall risk management processes. The operational risk management program selected by a bank will depend on a variety of variables, including their architecture, size, sophistication and risk profile.