module four Flashcards
Strategic risk
risk created by organisations business strategy
Operational risks
major risks stopping an organisation to do its strategic plan
Legal risks
regulator risk is the risk of changes to regulations including the potential for fines and penalties.
Reputational risk
a threat or danger to the good name or standing of an organisation.
Financial risk
arise where there is danger or possibility that the organisation and its shareholders will lose money
Credit risk
the risk that borrowers will not repay their loan. Interest rate risk arises from the impact of movements of interest rates
Liquidity risk
the risk a bank doesn’t have enough readily available funds to finance its day to day operations
Systemic risks
a further risk to the financial sector.
Holistic approach
An approach that recognises the affects between risks.
Governance and culture
strong risk culture is that everyone’s responsible with the governance setting everyones tone
Strategy and objective setting
work together in strategic planning process
Performance
risks are identified, assessed and responded to
Review and revision
reviewing means organisations can consider risk then can see what needs to be revised.
Information, communication and reporting
risk management requires sharing information across the organisation.
Credit risk
the risk borrowers wont repay their loan
Screening
important to have an understanding of the business
Monitoring and controlling
Important for bank to manage risks on all the loans
Credit risk management
monitoring and controlling performance of banks to control its risk exposure.
Measuring credit risk
Enables lender to calculate likelihood of borrower defaulting on a loan to ensure default rates are kept low
Algorithm and machine learning risk
Concerns that algorithms will make decisions alone
Strategy and governance
should include: principles, policies, standards, roles, responsibilities, control processes, procedures, appropriate people selection and training
Design, development, deployment and use
develop processes aligned with governance structure to address algorithm
Monitoring and testing
assess and oversee algorithm data
climate change risk
financial system could be damaged and financial stability threatened.
Physical risks
direct impacts of climate-related hazards on human and natural systems
Transition risks
arise from transition to low carbon economy
Liability risks
those who seek compensation for damage due to climate change
Standard asset risk
Assets suffered from unanticipated write-downs. Write-down is a term for the reduction of an asset when its ‘fair market value’ has fallen below its book value
Physical risk
direct impacts of climate-related hazards on human and natural systems
Acute physical risks
driven by an event with a short term impact.
Chronic physical risks
arise from gradual, longer-term impacts.
Transition risks
Risks that arise from transition to a low-carbon economy including. Risks from development in climate policy, legislation and regulation.
Climate policy, legislation and regulation
Charge fees for burning of carbon based fuels
Lower-carbon technologies
Occur when new, lower-carbon technologies replace existing
Reputation
An organisations reputation could be damaged if associated with high-carbon methods of production and distribution leading to less demand for products and services.
Liability risks
The risk that parties who suffered loss or damage from effects of climate change seek compensation from those held responsible
Opportunities
Opportunities for financial organisations to get on the right side of low-carbon transition
Data compromise
Threat of loss through cyber-attacks which are on the increase posing a major threat to banks and other organisations.
IT disruption
this can cause major disruption to a banks internal IT systems.
IT failure
risk of failure of banks internal IT systems
Vulnerabilities in SS7
allows phone networks to exchange information required for passing calls and texts they can empty customers’ banks by intercepting the messages banks send to customers.
Malware
damaging computer systems without the owners knowledge and steal data
Ransomware
malicious software designed to deny access to files or threaten to publish victims data unless a ransom is paid.
ATM attacks
sofware that ca scan peoples cards and security cameras that can see peoples pin numbers
Mobile banking attacks
they can be vulnerable to sophisticated cyber-attacks if they lack the security features necessary.
Distributed Denial of Service (DDoS)
a cyber-attack where the hacker seeks to disrupt an originations network services.
Insider threats
attacks can come from within an organisations own network.
Phishing as a service
a type of fraud where a cybercriminal pretends to be a reputable organisation or person. They can use phishing emails to distribute malicious links or attachments designed to obtain their login details or account information
Spear-phishing
a more targeted attempt at individuals to steal account information from a specific victim.
