Write in your own words to avoid
Plagiarism!!
RSK2601
ASSIGNMENT 01
YEAR: 2026
, Question 1
1.1
True
A loss caused by the incorrect capturing of static data of a Greece Bond is an example
of operational risk. Operational risk arises from inadequate or failed internal
processes, people, systems, or external events. Incorrect data capturing is a
system/process failure, not a market or credit event. Therefore, the loss results from
internal operational weaknesses rather than market price movements or borrower
default.
1.2
True
The uncertainty surrounding the payment of agreed-upon future amounts by borrowers
is referred to as default risk. Default risk (a component of credit risk) is the risk that a
borrower fails to meet contractual debt obligations such as interest or principal
repayments. It specifically relates to non-payment by the counterparty.
1.3
False
Derivative risk does not arise merely from decreases in portfolio value due to market
movements. A decrease in portfolio value caused by market movements is referred to
as market risk. Derivative risk specifically relates to risks associated with derivative
instruments (such as options, futures, swaps), including leverage risk, counterparty risk,
and model risk. Therefore, the statement incorrectly defines market risk as derivative
risk.
1.4
False
Business continuity management (BCM) does not require a purely reactive approach.
BCM involves proactive planning, including risk assessment, business impact
analysis, disaster recovery planning, and testing procedures before disruptions occur.
Plagiarism!!
RSK2601
ASSIGNMENT 01
YEAR: 2026
, Question 1
1.1
True
A loss caused by the incorrect capturing of static data of a Greece Bond is an example
of operational risk. Operational risk arises from inadequate or failed internal
processes, people, systems, or external events. Incorrect data capturing is a
system/process failure, not a market or credit event. Therefore, the loss results from
internal operational weaknesses rather than market price movements or borrower
default.
1.2
True
The uncertainty surrounding the payment of agreed-upon future amounts by borrowers
is referred to as default risk. Default risk (a component of credit risk) is the risk that a
borrower fails to meet contractual debt obligations such as interest or principal
repayments. It specifically relates to non-payment by the counterparty.
1.3
False
Derivative risk does not arise merely from decreases in portfolio value due to market
movements. A decrease in portfolio value caused by market movements is referred to
as market risk. Derivative risk specifically relates to risks associated with derivative
instruments (such as options, futures, swaps), including leverage risk, counterparty risk,
and model risk. Therefore, the statement incorrectly defines market risk as derivative
risk.
1.4
False
Business continuity management (BCM) does not require a purely reactive approach.
BCM involves proactive planning, including risk assessment, business impact
analysis, disaster recovery planning, and testing procedures before disruptions occur.
