RSK2602
ASSIGNMENT 1 (SEMESTER 1)..
DUE DATE: 20 March 2025..
PREVIEW:
QUESTION 1
Evaluating the Accuracy of Statements on Operational Risk
Statement 1:
Operational risk only arises from internal factors such as employees and processes, and external factors
do not contribute to operational risk.
ANSWER:
False. Operational risk arises from both internal and external factors. While internal factors such as
human errors, inadequate processes, and system failures contribute to operational risk, external factors
also play a significant role. External events such as natural disasters, cyberattacks, regulatory changes,
and economic downturns can also cause operational disruptions. For instance, a cyberattack originating
from an external hacker could compromise a bank’s IT system, causing financial and reputational
damage. Thus, operational risk is not limited to internal factors alone.
Statement 2:
The Basel Accord requires financial institutions to maintain a risk management framework that includes
identifying, assessing, monitoring, and controlling operational risks.
ANSWER:
True. The Basel Accord, specifically Basel II and Basel III, mandates that financial institutions implement
a comprehensive risk management framework to address operational risks. This includes identifying
potential risks, assessing their impact, monitoring risk exposures, and implementing controls to
Disclaimer:
mitigate losses.
The materials Basel IIare
provided introduced three
intended for approaches
educational to measuringpurposes only. They should not be
and informational
submitted as original work or used in violation of any academic institution's policies. The buyer is solely
responsible for how the materials are used.
ASSIGNMENT 1 (SEMESTER 1)..
DUE DATE: 20 March 2025..
PREVIEW:
QUESTION 1
Evaluating the Accuracy of Statements on Operational Risk
Statement 1:
Operational risk only arises from internal factors such as employees and processes, and external factors
do not contribute to operational risk.
ANSWER:
False. Operational risk arises from both internal and external factors. While internal factors such as
human errors, inadequate processes, and system failures contribute to operational risk, external factors
also play a significant role. External events such as natural disasters, cyberattacks, regulatory changes,
and economic downturns can also cause operational disruptions. For instance, a cyberattack originating
from an external hacker could compromise a bank’s IT system, causing financial and reputational
damage. Thus, operational risk is not limited to internal factors alone.
Statement 2:
The Basel Accord requires financial institutions to maintain a risk management framework that includes
identifying, assessing, monitoring, and controlling operational risks.
ANSWER:
True. The Basel Accord, specifically Basel II and Basel III, mandates that financial institutions implement
a comprehensive risk management framework to address operational risks. This includes identifying
potential risks, assessing their impact, monitoring risk exposures, and implementing controls to
Disclaimer:
mitigate losses.
The materials Basel IIare
provided introduced three
intended for approaches
educational to measuringpurposes only. They should not be
and informational
submitted as original work or used in violation of any academic institution's policies. The buyer is solely
responsible for how the materials are used.
