CBA Risk Management 2

Question 1

Which risk management framework is most widely adopted by U.S. banks for enterprise-wide risk governance?

Accepted Answer

COSO ERM

Answer

COSO ERM provides a widely adopted enterprise risk management framework that aligns risk with strategy and performance.

Question 2

Concentration risk in a loan portfolio is BEST mitigated by:

Accepted Answer

Diversifying exposures across industries and geographies

Answer

Diversifying exposures reduces the risk that losses in one sector or region will disproportionately impact the portfolio.

Question 3

A bank's net interest margin (NIM) is primarily affected by which type of risk?

Accepted Answer

Interest rate risk

Answer

Interest rate risk affects the difference between interest earned on assets and interest paid on liabilities, directly impacting NIM.

Question 4

Under Basel III, the Liquidity Coverage Ratio (LCR) requires banks to hold enough high-quality liquid assets to survive a stress scenario lasting:

Accepted Answer

30 days

Answer

The LCR mandates that banks hold sufficient HQLA to cover net cash outflows over a 30-day stress period.

Question 5

Which qualitative risk tool helps a bank identify and prioritize risks by plotting likelihood against impact?

Accepted Answer

Heat map / Risk matrix

Answer

A heat map (risk matrix) visually prioritizes risks by mapping probability on one axis and impact on the other.

(CBA) Certified Bank Auditor Practice Test