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ARM 54 Assignment 4 (Operational, Financial, And Strategic Risk) – Q’s & A’s $9.99   Add to cart

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ARM 54 Assignment 4 (Operational, Financial, And Strategic Risk) – Q’s & A’s

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ARM 54 Assignment 4 (Operational, Financial, And Strategic Risk) – Q’s & A’s

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  • October 4, 2024
  • 9
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • ARM 54
  • ARM 54
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LeCrae
ARM 54 Assignment 4 (Operational, Financial, And
Strategic Risk) – Q’s & A’s

Basel II categories of operational risk Right Ans - -people
-process
-systems
-external events

Strategies that can be used to mitigate operational risk associated with people
Right Ans - -recruitment
-selection procedures
-training and development of employees
-performance management
-incentives
-succession planning

Process Risk Right Ans - risk associated with procedures and practices
organizations use to conduct their business activities

Process risk management Right Ans - A framework of procedures and a
mechanism to identify practices that deviate from those procedures.

Types of systems risk Right Ans - technology and equipment

Root cause Right Ans - The event or circumstance that directly leads to an
occurrence.

Key risk indicator (KRI) Right Ans - A financial or nonfinancial metric used
to help define and measure potential losses

exposure indicator Right Ans - A metric used to identify risk inherent to an
organization's operations

Loss Ratio Right Ans - A ratio that measures losses and loss adjustment
expenses against earned premiums and that reflects the percentage of
premiums being consumed by losses.

, Control indicator Right Ans - A metric used to identify an organization's
management of risk

leading rather than lagging Right Ans - requirement for KRIs to be effective

risk indicators for the operational risk class of people Right Ans - -
education
-experience
-staffing levels
-employee surveys
-customer surveys
-compensation and experience benchmarked to industry
-incentives such as bonuses
-authority levels
-management experience

risk indicators for the operational risk class of processes Right Ans - -
quality scorecards
-analysis of errors
-areas of increased activity or volume
-review of outcomes
-internal and external review
-identification of areas of highest risk
-quality of internal audit procedures

risk indicators for the operational risk class of systems Right Ans - -
benchmarks against industry standards
-internal and external review
-analysis to determine stress points and weaknesses
-identification of areas of highest risk
-testing
-monitoring

Risk optimization Right Ans - A state whereby risk and return are balanced
so that a maximum return is achieved for the level of risk accepted by an
organization.

Hedging Right Ans - A financial transaction in which one asset is held to
offset the risk associated with another asset.

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