CISI Risk - Chapter 2

Question 1

What do the BIS do (3)?

Answer 1

Research and cooperation in international banking regulation
Regulators regulator
Banking services for central banks

Question 1

What is the BIS

Answer 1

Central Bank for central banks

Question 2

Does the BIS have legal force?

Answer 2

No. Countries implement by making changes to their own law and regulations. The IBF facilitates this

Question 3

What is the BCBS

Answer 3

Enhance understanding of supervisory issues and improve the quality of banking worldwide.

Question 4

What is the Pillar 1?

Answer 4

Minimum level of capital

Question 5

What is Pillar 2?

Answer 5

ICAAP assessment. Firms internal view of capital adequacy

Question 6

What is Pillar 3?

Answer 6

Public disclosure & Market disipline

Question 7

What kind of risk would a contagion be associated to?

Answer 7

Systemic

Question 8

What type of regulation does the BCBS provide?

Answer 8

Prudential Regualtion

Question 9

What is the equation for Basel 1 ?

Answer 9

Capital
——————————————– > 8%
Credit + Market + Operational

Question 10

What 4 things are submitted to BASEL in pillar 2?

Answer 10

Risks not covered in Pillar 1
Way that risk is managed
Quality of controls infrastructure
Way in which the risk profile is calculated

Question 11

What are the two NEW requirements for publication under Pillar 3

Answer 11

NSFR and LCR

Question 12

What is the ‘Use Test’

Answer 12

Extent to which Risk-Based Decision Making is Embedded within the firm.

Question 13

2 Evidence to support the use test

Answer 13

Senior Management review & Sing-off procedures.
Capital modelling (Scenario analysis & Stress testing)

Question 14

In the home/host principle who is responsible for the regulation and activities?

Answer 14

Home

Question 15

Home/Host principle - What is the Home

Answer 15

Parent company

Question 16

Home/Host principle - What is the Host

Answer 16

Operation in a foreign market

Question 17

Basel standards for Internationally active banks?

Answer 17

Apply full set of Basel Standards

Question 18

Basel standards for Non-International bank

Answer 18

Amended/local set of Basel Standards. Might use full set though.

Question 19

2 approaches to Regulatory risk?

Answer 19

Principle and statutory

Question 20

What is principal based approach?

Answer 20

High level binding objectives. Firms interpret principles and account for their actions

Question 21

What is Statutory approach

Answer 21

Rules based. Rigid rules that MUST be obeyed

Question 22

3 FCA Statutory objectivesd

Answer 22

Protect customers
Protect Financial Markets
Promote effective competition

Question 23

How is consumer protection managed (2)?

Answer 23

Conduct Risk
11 FCA Principles

Question 24

How are Business Standards managed? (1)

Answer 24

Conduct of Business rules (COBS)

Question 25

How are regulatory process managed? (1)

Answer 25

Risk-BASED REGUALTORY REVIEWS

Question 26

What