Operational Risk Management Flashcards
6 cards from real APRP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Operational Risk Management flashcards as text
In payment risk management, what does a 'four-eyes principle' control primarily prevent?
Answer: Unauthorized or erroneous actions by a single individual
The four-eyes principle requires that at least two people must authorize or review a significant action, reducing the risk of error or unauthorized activity by any single individual.
A payment firm identifies that a key third-party processor has no documented disaster recovery plan. What risk management action should be taken first?
Answer: Issue a formal finding and require the vendor to remediate within a defined timeframe
The appropriate first action is to document the finding, communicate it to the vendor, and require remediation within an agreed timeframe as part of vendor risk management.
What is the main goal of scenario analysis in payment operational risk management?
Answer: To estimate the impact of rare but high-severity events that may not be captured in historical data
Scenario analysis helps organizations estimate the potential impact of rare, severe operational risk events that historical loss data may not adequately represent.
Which of the following best describes 'concentration risk' in payment operations?
Answer: Risk from over-reliance on a single vendor, geography, or technology for critical payment functions
Concentration risk arises when an organization is overly dependent on a single vendor, region, or technology, making it vulnerable if that single source fails.
An organization's operational loss data shows a spike in internal processing errors following a core system upgrade. What is the most appropriate operational risk response?
Answer: Conduct a root cause analysis and implement corrective controls
A root cause analysis identifies what went wrong during the upgrade, enabling targeted corrective controls to prevent recurrence.
Under the Basel framework, which approach allows banks to calculate operational risk capital using their own internal loss data models?
Answer: Advanced Measurement Approach (AMA)
The Advanced Measurement Approach (AMA) allows qualifying banks to use their own internal models and historical loss data to calculate operational risk capital requirements.