medium · FRM Part 2 Operational Risk
If a bank experiences an operational loss of 10 million due to an error in a spread-based model used for daily trading, which source of model risk is this most likely attributable to?
- Fundamental error in model design or implementation.
- Market risk exposure due to adverse price moves.
- Strategic risk stemming from poor management oversight.
- Counterparty credit risk arising from an outright dealer default.
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