Chpt 1 The Changing Risk Environment Flashcards
Big Data
Sets of data that are too large to be gathered and analyzed by traditional methods.
Sets of data that are too large to be gathered and analyzed by traditional methods.
Big Data
Smart Product
An innovative item that uses sensors; wireless sensor
networks; and data collection, transmission, and
analysis to further enable the item to be faster, more
useful, or otherwise improved.
An innovative item that uses sensors; wireless sensor
networks; and data collection, transmission, and
analysis to further enable the item to be faster, more
useful, or otherwise improved.
Smart Product
Internet of Things (IoT)
A network of objects that transmit data to and from
each other without human interaction.
A network of objects that transmit data to and from
each other without human interaction.
Internet of Things (IoT)
Cloud Computing
Information, technology, and storage services
contractually provided from remote locations,
through the internet or another network, without a
direct server connection.
Information, technology, and storage services
contractually provided from remote locations,
through the internet or another network, without a
direct server connection.
Cloud Computing
Blockchain
A distributed digital ledger that facilitates secure
transactions without the need for a third party.
A distributed digital ledger that facilitates secure
transactions without the need for a third party.
Blockchain
Telematics
The use of technological devices in vehicles with
wireless communication and GPS tracking that
transmit data to businesses or government agencies;
some return information for the driver.
The use of technological devices in vehicles with
wireless communication and GPS tracking that
transmit data to businesses or government agencies;
some return information for the driver.
Telematics
Text mining
Obtaining information through language recognition.
Obtaining information through language recognition.
Text mining
Risk appetite
Amount of risk an organization is willing to take on
in order to achieve an anticipated result or return.
Amount of risk an organization is willing to take on
in order to achieve an anticipated result or return.
Risk appetite
Value at risk (VaR)
A technique to quantify financial risk by measuring
the likelihood of losing more than a specific dollar
amount over a specific period of time.
A technique to quantify financial risk by measuring
the likelihood of losing more than a specific dollar
amount over a specific period of time.
Value at risk (VaR)
Cost of risk
The total cost incurred by an organization because of
the possibility of accidental loss.
The total cost incurred by an organization because of
the possibility of accidental loss.
Cost of risk
Exposure
Any condition that presents a possibility of gain or
loss, whether or not an actual loss occurs.
Any condition that presents a possibility of gain or
loss, whether or not an actual loss occurs.
Exposure
Volatility
Frequent fluctuations, such as in the price of an asset.
Frequent fluctuations, such as in the price of an asset.
Volatility
Likelihood
A qualitative estimate of the certainty with which
the outcome of a specific event can be predicted.
A qualitative estimate of the certainty with which
the outcome of a specific event can be predicted.
Likelihood
Consequences
The effects, positive or negative, of an occurrence.
The effects, positive or negative, of an occurrence
Consequences
Time horizon
Estimated duration.
Estimated duration.
Time horizon
Correlation
A relationship between variables.
A relationship between variables.
Correlation
Pure risk
A chance of loss or no loss, but no chance of gain.
A chance of loss or no loss, but no chance of gain.
Pure risk
Speculative risk
A chance of loss, no loss, or gain.
A chance of loss, no loss, or gain.
Speculative risk
Credit risk
The risk that customers or other creditors will fail to
make promised payments as they come due.
The risk that customers or other creditors will fail to make promised payments as they come due.
Credit risk
Subjective risk
The perceived amount of risk based on an individual’s
or organization’s opinion.
The perceived amount of risk based on an individual’s
or organization’s opinion.
Subjective risk
Objective risk
The measurable variation in uncertain outcomes
based on facts and data.
The measurable variation in uncertain outcomes
based on facts and data.
Objective risk
Diversifiable risk
A risk that affects only some individuals, businesses,
or small groups.
A risk that affects only some individuals, businesses,
or small groups.
Diversifiable risk
Systemic risk
The potential for a major disruption in the function
of an entire market or financial system.
The potential for a major disruption in the function
of an entire market or financial system.
Systemic risk
Market risk
Uncertainty about an investment’s future value
because of potential changes in the market for that
type of investment.
Uncertainty about an investment’s future value
because of potential changes in the market for that
type of investment.
Market risk
Liquidity risk
The risk that an asset cannot be sold on short notice
without incurring a loss.
The risk that an asset cannot be sold on short notice
without incurring a loss.
Liquidity risk
Risk management framework
A foundation for applying the risk management
process throughout the organization.
A foundation for applying the risk management
process throughout the organization.
Risk management framework
Risk criteria
Information used as a basis for measuring the
significance of a risk.
Information used as a basis for measuring the
significance of a risk.
Risk criteria
Internal control
A system or process that an organization uses to
achieve its operational goals, internal and external
financial reporting goals, or legal and regulatory
compliance goals.
A system or process that an organization uses to
achieve its operational goals, internal and external
financial reporting goals, or legal and regulatory
compliance goals.
Internal control
Arises from property, liability, or personnel loss exposures (i.e. property risk, legal risk, personnel risk, consequential loss)
Hazard risk
Arises from people, processes, systems or controls (i.e. IT risk, Management oversight, Business processes)
Operational risk
Arises from the effect of market forces on financial assets or liabilities (i.e. Market risk, credit risk, price risk, liquidity risk)
Financial risk
Arises from trends in the economy and society (i.e. economic environment, political environment, demographics, competition)
Strategic risk
What are the 4 risk quadrants
Hazard risk, operational risk, financial risk and strategic risk
Risk classifications focus on some aspect of the risk itself. What does the four quadrants of risk focus on?
The risk source and who traditionally manages it.
Speculative risk is highly affected by these factors
Pure risk and Credit risk
