APRP Operational Risk Management 4

Question 1

A payments processor experiences a surge in chargebacks due to a compromised merchant. Which operational risk control should be triggered FIRST?

Accepted Answer

Suspend the merchant account pending investigation

Answer

Suspending the merchant account is the immediate containment action to stop further fraud exposure before escalating to networks or regulators.

Question 2

Under the Basel II operational risk framework, which loss event type category covers payment processing errors caused by system failures?

Accepted Answer

Business disruption and system failures

Answer

Basel II classifies system outages and technology failures under 'Business Disruption and System Failures,' distinct from process errors.

Question 3

A payment firm's key risk indicator (KRI) for failed settlement transactions exceeds its threshold. What is the primary purpose of a KRI threshold breach?

Accepted Answer

To signal that a risk may be approaching unacceptable levels requiring management action

Answer

KRI thresholds serve as early-warning signals prompting management review and corrective action before losses materialize.

Question 4

Which method for calculating operational risk capital under Basel II/III uses a fixed percentage of gross income averaged over three years?

Accepted Answer

Basic Indicator Approach (BIA)

Answer

The Basic Indicator Approach applies a 15% alpha factor to average positive annual gross income over the preceding three years.

Question 5

A payments company wants to transfer operational risk exposure for large-scale data breaches to a third party. The BEST mechanism to accomplish this is:

Accepted Answer

Purchasing cyber liability insurance

Answer

Cyber liability insurance is a risk transfer mechanism that shifts financial consequences of data breaches to an insurer.

APRP - Accredited Payments Risk Professional Practice Test

APRP - Accredited Payments Risk Professional Practice Test

APRP Operational Risk Management 4