RSK2602
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 20 AUGUST 2025
, Fundamentals of Operational & Financial Risk
Question 1 – Evaluate the accuracy of each statement
1.1 True – Operational failures caused by staff are indeed driven by error, fraud, and
data theft. These are internal events that arise from human actions, either unintentional
(errors) or intentional (fraud, theft).
Reference: Basel Committee on Banking Supervision (BCBS, 2011) defines operational
risk as including internal fraud, external fraud, and execution errors.
1.2 False – Technology and systems are generally considered internal drivers of
operational risk, as they are part of the organisation’s internal infrastructure. External
drivers would include market changes, regulatory requirements, or natural disasters.
Reference: Crouhy, Galai & Mark (2014) note that technology risks fall under internal
operational risk sources.
1.3 False – Operational risk excludes strategic and reputational risks in the Basel
definition, although these may be consequences of operational risk events. Operational
risk is the risk of loss from inadequate or failed internal processes, people, systems, or
external events.
Reference: BCBS (2006).
1.4 False – “Risk-indifferent” means the organisation perceives no need to adjust the
risk/reward balance for an increase in risk. However, this attitude is conducive to taking
risks without expecting higher returns — it is not necessarily anti-risk-taking.
Reference: Hopkin (2018).
1.5 True – Self-insurance can indeed be achieved by establishing a captive insurance
company, which is owned by the insured organisation to cover its own risks.
Reference: Rejda & McNamara (2017).
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 20 AUGUST 2025
, Fundamentals of Operational & Financial Risk
Question 1 – Evaluate the accuracy of each statement
1.1 True – Operational failures caused by staff are indeed driven by error, fraud, and
data theft. These are internal events that arise from human actions, either unintentional
(errors) or intentional (fraud, theft).
Reference: Basel Committee on Banking Supervision (BCBS, 2011) defines operational
risk as including internal fraud, external fraud, and execution errors.
1.2 False – Technology and systems are generally considered internal drivers of
operational risk, as they are part of the organisation’s internal infrastructure. External
drivers would include market changes, regulatory requirements, or natural disasters.
Reference: Crouhy, Galai & Mark (2014) note that technology risks fall under internal
operational risk sources.
1.3 False – Operational risk excludes strategic and reputational risks in the Basel
definition, although these may be consequences of operational risk events. Operational
risk is the risk of loss from inadequate or failed internal processes, people, systems, or
external events.
Reference: BCBS (2006).
1.4 False – “Risk-indifferent” means the organisation perceives no need to adjust the
risk/reward balance for an increase in risk. However, this attitude is conducive to taking
risks without expecting higher returns — it is not necessarily anti-risk-taking.
Reference: Hopkin (2018).
1.5 True – Self-insurance can indeed be achieved by establishing a captive insurance
company, which is owned by the insured organisation to cover its own risks.
Reference: Rejda & McNamara (2017).
