Exam (elaborations)
ARM 402: Study Sets Section 3 – Questions/Solutions
- Course
- Institution
ARM 402: Study Sets Section 3 – Questions/Solutions
[Show more]
Content preview
ARM 402: Study Sets Section 3 – Questions/SolutionsOperational Risk Right Ans - Any possibility of loss arising from people,
processes, systems, or external events; should be evaluated based on each
orgs strategic objectives, risk appetite, and risk tolerance
Internal Controls Right Ans - Help ensure that an organization's methods,
processes, and systems support organizational objectives and limit
operational risks where possible; assumes a prominent role in preventing
losses that are uninsurable or otherwise ineligible for risk transfer; must be
accompanied by strong control environment; accountability starts with
policies and procedures that define employee responsibilities
Management Controls Right Ans - Coordinate resource allocation, motive
performance, and measure outcomes
Applying Internal Controls to Operational Risk Right Ans - systems are
often designed by the managers of the areas in which they will be put to use;
may include preventive controls and/or detective controls
Common Types of Controls Right Ans - -approvals and authorizations (P)
-reconciliations (D)
-segregation of duties (P)
-safeguarding assets (P/D)
Operational Risks - IT Right Ans - -reputational and financial risks
presented by corruption/theft of customer data
-failing hardware, buggy software, critical infrastructure failures
-phishing attacks
-arise out of upgrading virus protection software
-project backlog
IT Operational Risk Classifications Right Ans - -security
-availability
-performance
-compliance
Scenario Analysis Right Ans - provides an opportunity for an organization
to simulate IT-related scenarios and gauge how prepared the org is to deal
, with related risks; should be designed to hep risk professionals ask questions
that will lead to the identification and assessment of operation risks facing an
org
Insurance Securitization Right Ans - Involves 3 Factors:
-the org transferring risk
-investors who take on the risk
-special purpose vehicle (SPV): acts as an insurer/ reinsurer
Parametric Trigger Right Ans - A measurement that determines the value
of an insurance-related capital market product based on a parameter that isn't
within the control of the org transferring the risk; link the execution of a
contract to a predetermined parameter or metric related to the subject of the
contract, often through blockchain
Parametric Contracts Right Ans - Allow coverage for events that may
otherwise not be insurable
Parametric Financing Right Ans - can help alleviate possible losses that
result from operational risk; African Risk Capacity
Derivative Right Ans - A financial contract that derives its value from the
performance of another asset, such as a commodity, or that can derive its
value from the yields on another asset or the level of an index, such as the
Standard & Poor's 500 Stock Index; 3 major categories:
-forwards/ futures contracts
-options
-swaps
Forwards Right Ans - simplest form of derivative for financial risk
management;
Futures Right Ans - a forward contract that is exchange-traded and
therefore standardized , openly available and transferable
Options Right Ans - Available for stocks, commodities, foreign exchange
rates, and other traded securities; the holder of the ______________ has the right
(not obligation) to buy or sell the associated asset for a specific price (strike
price)
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 Studycafe. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67866 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now