Introduction To risk management

Question 1

Risk Infrastructure are responsible for: (3)

Answer 1

Risk IDENTIFICATION
Measurement
Monitoring

Question 2

Risk governance is the top down process that defines: (3)

Answer 2

Tolerance

Provides risk oversight (supervision)

Guidance to align risk with enterprises goals

Question 3

Risk budgeting

2 main objectives
1 benefit

Answer 3

Quantifies & Allocates

(where and how risk is taken)

Comes after risk tolerance

The tolerable risk

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Benefit

Consider the risk tradeoff

Question 4

Liquidity risk

Answer 4

Most associated with Bid-ask Spreads

Question 5

Risk governance is where (decisions) :

Answer 5

1. Goals and responsibilities are defined
2. Top level decisions (company’s risk tolerance)

Question 6

Risk tolerance should reflect a company:

Answer 6

Competitive position

Question 7

Example of operation of risk transfer

Answer 7

Insurance

Question 8

Example of operation of Risk Shifting

Answer 8

Derivatives Hedge

Question 9

Risk identification and measurement is:

Answer 9

Qualitative assessment of risk

Question 10

Risk tolerance:

Answer 10

Focus on appetite for risk

Question 11

SEQUENCE OF EVENTS OF RISK (enterprises) (3)

Answer 11

Risk tolerance
Risk budgeting
Risk Exposure