Risk Definitions

Question 1

According to the FFIEC, what are the six types of risk in a bank?

Answer 1

(SCROLL)
-Strategic
-Credit
-Reputation
-Operational
-Legal/Compliance
-Liquidity

Question 2

What risk type deals with mission and future plans for entering new business lines, expanding (mergers/acquisitions), and enhancing infrastructure?

Answer 2

Strategic Risk

Question 3

What risk type arises when I party will not settle an obligation for full value?

Answer 3

Credit Risk

Question 4

What risk type occurs when negative publicity, regarding an institution business, practice leads to a loss of revenue or litigation?

Answer 4

Reputation Risk

Question 5

What is the risk of loss resulting from inadequate or failed internal processes, people, and systems, are external events?

Answer 5

Operational Risk

Question 6

Arises from failure to comply with statutory or regulatory obligations, existing consumer protection statues, regulations, and case law governing retail payment transactions?

Answer 6

Legal/compliance Risk

Question 7

Current and potential risk to earnings or capital arising from a financial institutions inability to meet its obligations when they come due without incurring unacceptable losses?

Answer 7

Liquidity Risk