Chapter 4- Evaluating Supervision

Question 1

State factors that impact the type of supervision required?

Answer 1

Type/size of business
Products/services
Geographic locations
Regulation/external factors
Structure
Expertise and competency of people

Question 2

Confirm some advantages and disadvantages of risk based supervision?

Answer 2

Advantages.                     
Focus resource where needed
More effective use of resource
Meets regulator/shareholders expectations
Mitigate/avoid some risks
Enables informed decisions

Disadvantages
Improper assessment could waste resource
Opportunity costs/resource not used elsewhere
Over zealous risk management could prevent new opportunities.
Can create a dependancy culture

Question 3

Describe Basel II

Answer 3

Risks that arise from inadequate or failed internal processes, people, systems or from external events.