RSK2602
ASSIGNMENT 1
SEMESTER 1
ANSWERS 2026
RSK2602 ASSIGNMENT 1 SEMESTER 1
ANSWERS 2026
, RSK2602 ASSESSMENT 01
Due date 27 March 2026
Semester 1
Question 1 – True/False with motivation
1.1 A loss caused by the incorrect capturing of the static data of a Greece Bond is an
example of an operational risk.
- True
- Motivation: Data capture errors reflect internal processes/systems failures and
human factors, which are the core of operational risk (as opposed to market or credit
risk).
1.2 The uncertainty surrounding the payment of agreed-upon future amounts by
borrowers is referred to as “default risk”.
- True
- Motivation: Default risk is the risk that a borrower fails to meet contractual payment
obligations. This is a credit risk, not an operational risk.
1.3 Derivative risk arises from the decrease in the value of financial portfolios due to
market movements.
- False
- Motivation: The loss from market movements is market risk; “derivative risk” usually
refers to risks specific to using derivatives (e.g., mispricing, model risk, leverage,
liquidity, counterparty risk). The statement conflates derivative-related risk with
general market risk.
1.4 Business continuity management requires a reactive approach towards risk
events.
- False
- Motivation: BCM is fundamentally proactive and preventive, focusing on
preparedness, resilience, and continuity plans before events occur. A reactive stance
undermines BCM objectives.
ASSIGNMENT 1
SEMESTER 1
ANSWERS 2026
RSK2602 ASSIGNMENT 1 SEMESTER 1
ANSWERS 2026
, RSK2602 ASSESSMENT 01
Due date 27 March 2026
Semester 1
Question 1 – True/False with motivation
1.1 A loss caused by the incorrect capturing of the static data of a Greece Bond is an
example of an operational risk.
- True
- Motivation: Data capture errors reflect internal processes/systems failures and
human factors, which are the core of operational risk (as opposed to market or credit
risk).
1.2 The uncertainty surrounding the payment of agreed-upon future amounts by
borrowers is referred to as “default risk”.
- True
- Motivation: Default risk is the risk that a borrower fails to meet contractual payment
obligations. This is a credit risk, not an operational risk.
1.3 Derivative risk arises from the decrease in the value of financial portfolios due to
market movements.
- False
- Motivation: The loss from market movements is market risk; “derivative risk” usually
refers to risks specific to using derivatives (e.g., mispricing, model risk, leverage,
liquidity, counterparty risk). The statement conflates derivative-related risk with
general market risk.
1.4 Business continuity management requires a reactive approach towards risk
events.
- False
- Motivation: BCM is fundamentally proactive and preventive, focusing on
preparedness, resilience, and continuity plans before events occur. A reactive stance
undermines BCM objectives.