AML Risk Assessment & Management 3

Question 1

Which metric is most useful for risk assessment in a fraud detection model where false negatives are far more costly than false positives?

Accepted Answer

Recall (Sensitivity)

Answer

Recall measures the proportion of actual fraud cases correctly identified, directly capturing the cost of missing true fraudulent transactions.

Question 2

A model's Expected Calibration Error (ECE) is high. What risk does this introduce in a decision-support system?

Accepted Answer

Predicted probabilities misrepresent true likelihoods, leading to misinformed decisions

Answer

High ECE means confidence scores are unreliable proxies for actual outcome probabilities, so decision thresholds calibrated on them will systematically under- or over-estimate real risk.

Question 3

What is 'concept drift' and why is it a risk management concern in deployed ML systems?

Accepted Answer

A change in the statistical relationship between inputs and the target variable over time

Answer

Concept drift occurs when the underlying data-generating process changes so that previously learned input-output relationships no longer hold, degrading model reliability.

Question 4

Which of the following best represents a proactive risk control in an ML model lifecycle?

Accepted Answer

Implementing automated performance monitoring with alerting thresholds before deployment

Answer

Proactive controls prevent or detect problems before they cause harm; automated monitoring with pre-set alert thresholds catches degradation before it escalates to an incident.

Question 5

When performing a risk assessment for an ML model, 'inherent risk' refers to:

Accepted Answer

The raw level of risk before any mitigation controls are in place

Answer

Inherent risk is the exposure to adverse outcomes in the absence of any risk controls, providing a baseline for understanding how much mitigation is needed.

(AML) Advanced Machine Learning Certification Practice Test

(AML) Advanced Machine Learning Certification Practice Test

AML Risk Assessment & Management 3