Operational Risk Governance

Question 1

what is operational risk governance?

Answer 1

policies, processes, and structures used to manage operational risks. ensures risks are identified, assess, managed and monitored effectively.

Question 2

why is operational risk governance important?

Answer 2

Provides a structured approach to
managing risks.
* Ensures compliance with regulatory
requirements.
* Enhances organizational resilience and
stability.
* Fosters a risk-aware culture within the
organization.
* Supports informed decision-making and
strategic planning.

Question 3

what is the risk committee and what are their powers?

Answer 3

the sit above the three lines of defence and are responsible for overall governance of the firm - composed of executive and non-executive directors of the firm depending on the firms structure

Question 4

what are the key elements of the 3 lines of defense model?

Answer 4

first line: operational management identifying risks
second line: risk and compliance functions
third lines: internal audit

Question 5

what are the key components of operational risk governance?

Answer 5

• risk culture
• risk appetite
• policies and procedures
• identification and assessment
• monitoring and reporting

Question 6

what is the role of the board of directors in risk governance?

Answer 6

set the tone and approve the risk management framework. ensures risk governance aligns with strategic objectives

Question 7

what is the role of senior management in risk governance?

Answer 7

implement the risk management framework, monitor and manage operational risk, ensure risk management practices are integrated into business practices.

Question 8

what is the role of the risk committee?

Answer 8

Risk management committee: oversee the development and implementation of the risk management framework, review and approve risk policies and procedures. monitor exposures and mitigation efforts

audit committee: provide independent oversight of the risk management process, review the effectiveness of internal controls and risk management systems

Question 9

what are risk policies and procedures?

Answer 9

Policies: define the organizations approach to risk management, outline roles, responsibilities and risk appetite

procedures: provide detailed steps for identifying, assessing and mitigating risks, ensure consistency and effectiveness in risk management processes

Question 10

What are the 2 risk indicators?

Answer 10

KRIs: metrics used to signal increasing risk exposures

KPIs: metrics to measure the effectiveness of risk controls

Question 11

what are the different reporting mechanisms in risk governance?

Answer 11

• regular reports to senior management
• real time dashboards for continuous monitoring
• incident reporting systems to capture risk events and near misses