Past Exam Flashcards

1
Q

A Key Reason why Risk Management should be extended throughout a project is because

A

Reduces likelihood of unexpected outcomes

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2
Q

ERM compares what two factors

A

Risk profile and exposure

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3
Q

Maturity Ladders enable specific analysis of ?

A

Cash Flow

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4
Q

What is the difficulty with analysing the factors affecting a certain risk type

A

Lack of Data

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5
Q

External and internal risks often are address simultaneously as:

A

They often overlap

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6
Q

A firm is found in breach of a principles based framework – What action will be taken by the regulator?

A

License revoked

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7
Q

What is the ratio of capital adequacy laid out in the Basel principles?

A

Leverage Ratio

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8
Q

What Determines liquidity Risk within a Firms assets:

A

Marketability

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9
Q

Loss casual Analysis covers what?

A

Root Causes of risk

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10
Q

Lessons learned from an Operational Risk events should be:

A

use to update operational risk policy

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11
Q

A Graphical representation of operational risk losses will tend to:

A

Exhibit Fat Tails

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12
Q

What type of risk affects the price of options:

A

Volatility

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13
Q

Asset allocation involves what?

A

To reduce risk via diversification

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14
Q

Which Measure is used to determine funding requirements at different confidence levels?

A

Liquidity at risk

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15
Q

Effective market risk function should monitor P&L at least once a:

A

Day

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16
Q

BIS require the public disclosure of :

A

Org Structure

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17
Q

A typical investment mandate must include the details of:

A

Tracking error

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18
Q

How does Interest Rate risk and commodity price risk interact:

A

Nothing Happens

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19
Q

What is an example of a market risk limit?

A
  • Stop/loss
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20
Q

What boundary issues cause issues in credit risk:

A
  • internal processes
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21
Q

What are the advantages of VaR?

A
  • Common Comparison standard across all asset classes
22
Q

What is the best way to ensure a model is accurate

A
  • implementing the output of a model and (ii) being able to assess the value of that implementation, the easier it is to gauge the model’s accuracy
23
Q

Which analysis is used to estimate normal growth in new deposit accounts?

A

Behavioral Analysis

24
Q

Key benefits of a well constructed risk model are

A

Competitive advantage and makes quicker decision making and can automate complex methods

25
Q

How can a Uk investor in a UK business be exposed to currency risk?

A

UK companies offer products to foreign nations and clients

26
Q

How can joining an industry group typically help a new firm mitigate risk?

A

It Gives better regulation

27
Q

KRI’s help a firm anticipate problems by?

A

Allowing Trends to be monitored

28
Q

Best way to address risk with a self-certification method?

A

Risk workshops with key staff

29
Q

What does Ex-post mean in relevance to tracking error? Or What is Ex-post?

A

The bell curve shape and has predictive properties

30
Q

Variance calculation

A
  • 16.24
31
Q

Which measurement is used to determine gross value/amount a bank is exposed to in the future at a point of potential default:

A

Exposure at default EAD

32
Q

Which Risk affects options value

A

Volatility

33
Q

Credit exposure is often undermined by an over-reliance on:

A

Notional estimates

34
Q

Operational Risk procedures policy needs to consider what factor:

A

Roles and responsibilities

35
Q

What type of external risk is most likely to be reduced/mitigated by building relationships at senior levels?

A

Stakeholder risk

36
Q

What is the main reason for carrying out an initial currency offering in a crypto asset?

A

Raise Capital

37
Q

1st line of risk management defence is:

A

Business manager

38
Q

2nd line of risk management is:

A

An independent risk function (including compliance)

39
Q

3rd line of risk management defence is:

A

internal audit

40
Q

A financial Firm has landed a new business deal and only considered financial regulations. It is at risk of:

A

Losing existing staff

41
Q

The validity of modelling in predicting maximum loss maybe comprised to and over reliance on:

A

Confidence level

42
Q

What boundary issues cause issues in market risk:

A

Price Level Risk

43
Q

How often does BIS suggest credit risk reviews take place?

A

Annually

44
Q

Using historical Simulation how would you calculate VaR?

A

Apply past factors to current prices

45
Q

What is the benefit of using stature based regs over principle based frameworks?

A

It is more simple to interpret the rules

46
Q

In a market Dislocation event what happens to the prices of housing?

A

They Fall

47
Q

After a business process is altered/changed at bank settlements, what is the first operation risk process that is required by the firm/bank?

A

Review/ assess risk control structure

48
Q

What are the key weaknesses of Risk modelling?

A

Model due to its various shortcomings, approximations and uncertainties limitations are also a consequence of assumptions underlying

49
Q

Which of the following is evidence of impairment

A

A breach of Contract

50
Q

According to BIS, a firms exposure to interest rate risk is typically indicated by

A

The Overall structure of its balance sheet

51
Q

Typical investment mandate includes max level of

A

Tracking error