Operational Risk — Frm Part 2 Practice Questions

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1. Which of the following describes the 'One Big Loss' principle for heavy-tailed (subexponential) distributions?
2. Under the current Basel Standardized Measurement Approach (SMA) for operational risk, which factor is the sole
3. Which of the following is NOT one of them?
4. What is the marginal coefficient for the portion of the BI that exceeds 30 billion euros?
5. According to standard regulatory definitions (such as SR 11-7), which three components are required to define
6. A material change to a model is most likely to be triggered by which event?
7. How long is the historical window required for calculating the average annual operational losses used in the S
8. In the Bow-Tie analysis framework, where do 'Preventive Controls' sit relative to the operational event?
9. In the Standardized Measurement Approach (SMA), the Business Indicator (BI) serves as a proxy for which of the
10. What is the minimum threshold for an individual loss to be included in this calculation under standard Basel r
11. The Standardized Measurement Approach (SMA) formula is composed of two primary factors: the Business Indicator
12. Under a proper governance framework, 'Model Limitations' must be:
13. Under the Standardized Measurement Approach (SMA), the Business Indicator (BI) serves primarily as a proxy for
14. Under the three pillars of model validation, which pillar is concerned with verifying that the model's underly
15. What is the regulatory treatment for 'Boundary Events' regarding capital requirements under Basel III?
16. What is the relationship between the Business Indicator (BI) and the Business Indicator Component (BIC)?
17. When a bank prioritizes validation resources by grouping models based on their potential P&L impact and method
18. Which coefficient is applied to the marginal segment of the Business Indicator (BI) exceeding €30 billion?
19. Which of the following describes 'Self-Assessment Bias' in the Risk and Control Self-Assessment (RCSA) process
20. If the Business Indicator Component (BIC) is $2.0 billion and the Internal Loss Multiplier (ILM) is 1.0, what
21. What does the resulting ILM suggest about the supervisor's view of the bank's risk profile?
22. Which principle has the correspondent bank primarily violated?
23. A bank's internal audit department discovers that a trader h… — Which historical case and control failure does
24. A bank's Risk Appetite Framework (RAF) defines 'Risk Capacit… — Where should the 'Risk Appetite' be set relati
25. If the bank had a poor loss history (LC > BIC), what is the impact on its capital?
26. According to SR 11-7, what are the two primary channels through which 'Model Risk' arises?
27. A customer consistently deposits $9,800 in cash at three dif… — This behavior is a classic 'red flag' for whic
28. Why is hot-failover often insufficient against a ransomware attack that corrupts data?
29. Using the Basel III Standardized Measurement Approach (SMA), what is the resulting Business Indicator Componen
30. An operational risk event occurs where an operations error l… — According to the Basel boundary rules, how is