RSK2602
[Date]
Assignment 1
(COMPLETE
ANSWERS)
Semester 1 2025 -
DUE 20 March
2025
, RSK2602 Assignment 1 (COMPLETE
ANSWERS) Semester 1 2025 - DUE 20 March
2025
QUESTION 1 Evaluate the accuracy of each of the
following statements. Indicate whether you consider the
statement accurate (true) or not (false) and provide a full
motivation for your answer. ): True or False: Operational
risk only arises from internal factors such as employees
and processes, and external factors do not contribute to
operational risk. True or False: The Basel Accord requires
financial institutions to maintain a risk management
framework that includes identifying, assessing,
monitoring, and controlling operational risks. True or
False: Business continuity planning (BCP) is not necessary
for managing operational risk since most risks can be
controlled through internal policies. True or False: One of
the key components of operational risk is system risk,
which includes IT failures, cybersecurity breaches, and
outdated technology affecting business operations.
Here are the evaluations for each statement with full motivations:
1. False – Operational risk only arises from internal factors such as employees and
processes, and external factors do not contribute to operational risk.
o Operational risk arises from both internal and external factors. While internal
factors include employees, processes, and systems, external factors such as
natural disasters, regulatory changes, economic instability, and cyber-attacks also
contribute significantly to operational risk. For example, supply chain disruptions
due to geopolitical conflicts or pandemics can severely impact business
operations. The Basel II framework explicitly recognizes both internal and
external sources of operational risk.
2. True – The Basel Accord requires financial institutions to maintain a risk management
framework that includes identifying, assessing, monitoring, and controlling operational
risks.
o The Basel Accord (particularly Basel II and Basel III) mandates that financial
institutions implement a robust operational risk management framework. This
framework includes identifying risks, assessing their potential impact, monitoring
them continuously, and implementing controls to mitigate their effects.
[Date]
Assignment 1
(COMPLETE
ANSWERS)
Semester 1 2025 -
DUE 20 March
2025
, RSK2602 Assignment 1 (COMPLETE
ANSWERS) Semester 1 2025 - DUE 20 March
2025
QUESTION 1 Evaluate the accuracy of each of the
following statements. Indicate whether you consider the
statement accurate (true) or not (false) and provide a full
motivation for your answer. ): True or False: Operational
risk only arises from internal factors such as employees
and processes, and external factors do not contribute to
operational risk. True or False: The Basel Accord requires
financial institutions to maintain a risk management
framework that includes identifying, assessing,
monitoring, and controlling operational risks. True or
False: Business continuity planning (BCP) is not necessary
for managing operational risk since most risks can be
controlled through internal policies. True or False: One of
the key components of operational risk is system risk,
which includes IT failures, cybersecurity breaches, and
outdated technology affecting business operations.
Here are the evaluations for each statement with full motivations:
1. False – Operational risk only arises from internal factors such as employees and
processes, and external factors do not contribute to operational risk.
o Operational risk arises from both internal and external factors. While internal
factors include employees, processes, and systems, external factors such as
natural disasters, regulatory changes, economic instability, and cyber-attacks also
contribute significantly to operational risk. For example, supply chain disruptions
due to geopolitical conflicts or pandemics can severely impact business
operations. The Basel II framework explicitly recognizes both internal and
external sources of operational risk.
2. True – The Basel Accord requires financial institutions to maintain a risk management
framework that includes identifying, assessing, monitoring, and controlling operational
risks.
o The Basel Accord (particularly Basel II and Basel III) mandates that financial
institutions implement a robust operational risk management framework. This
framework includes identifying risks, assessing their potential impact, monitoring
them continuously, and implementing controls to mitigate their effects.
