01. FRM Overview

Question 1

Give me factors that increase the need of FRM

Answer 1

Financial Markets turmoil, Globalization, Market Volatility, Tech & Digitalization, Higher level of complexity, Inflation, Climate Change, Regulatory preassure

Question 2

Regulatory ans Supervisory Authorities aims..

Answer 2

Economic and financial stability, Capital adequacy, Transparency and Market dicipline, Sustainability

Question 3

What is the difference between Risk capacity and Risk Propensity

Answer 3

Capacity is an objective factor, is the risk that the bank would be able to take. Propensity is subjective and is how much risk is the bank willing to take.

Question 4

Strategic Risk? when does the bank take strategic risk?

Answer 4

Risk related fully to the buisness model. A bank takes it when is systematically doing worst than the others.

Question 5

Operational Risk?

Answer 5

People, IT-systems might be a source of operational risks. For ex, fraud.

Question 6

Financial risk?

Answer 6

is the native risk. In terms of the way the capital is allocated is the most important one. Interest Rates, crdits

Question 7

Compliance risk?

Answer 7

3 levels of regulations: Common level, specific regulation for financial sistems, internal regulations.

Question 8

What are the strategies of FRM?

Answer 8

Avoidance, Reduction, Transfer, Retention, Sharing.

Question 9

What is FRM? what are the steps to follow?

Answer 9

Indentification, characterize, prioritization of any risk and coordinate an economical application to minimize it. Steps: Identify, Asses vulnerabiliry, determine the risk, identify ways to reduce it, prioritize risk reduction based on strategy.

Question 10

How is governance relatd to Risk Mng? whi takes credit risk? whi taked market risk?

Answer 10

The risk manager receives the mandate from the board and act accordingly. Credit Risk is taken by CCO (credit offcicer). Market risk is taken by who invests money and manage the financial portfolio (CFO)