Exam (elaborations)
ARM 54 Assignment 4 (Operational, Financial, And Strategic Risk) – Q’s & A’s
- Course
- Institution
ARM 54 Assignment 4 (Operational, Financial, And Strategic Risk) – Q’s & A’s
[Show more]
Content preview
ARM 54 Assignment 4 (Operational, Financial, AndStrategic 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.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LeCrae. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67163 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now