Part 1 assessment Flashcards
Why do we need to measure and assess operational risk?
Establish a quantitative baseline for operating and improving the control environment
Appropriate acc / responsibility
Risk aware culture
Satisfy regulators
Make an assessment of financial risk exposure
Where any risk is quantifiable the firm should measure potential loss at 3 levels :
Expected loss
Statistical loss
Stress loss
What things should appear in a risk register…
Description Owner Responsible Assessment When How Links Strategy Containment Further action
What is a risk map / summary risk profile ?
Simple mech to increase visibility of risks
Uncertainty analysis seeks to…
Quantify the uncertainties contained within assessment of risk
QUANTIFY
(What can go wrong, how frequently,what are the consequences)
Quantifying risk is…
Most ideal basis for decision making - financial impact
Why do we measure risk at all? (2)
It gives the organisation an ability to understand the likelihood of risks
Also to understand the impact that such risks would deliver
