CORES CORES Governance Frameworks & Risk Appetite 2

Question 1

Which of the following best describes an Operational Risk Policy?

Accepted Answer

A document that sets out principles, responsibilities, and minimum standards for managing operational risk

Answer

A list of approved vendors for risk software

Answer

A summary of recent operational loss events

Answer

A marketing document for regulators

Question 2

When embedding operational risk governance into new product approval, what is the key objective?

Accepted Answer

To identify and mitigate operational risks before a product or service is launched

Answer

To ensure the product generates maximum revenue

Answer

To delay product launches for thorough regulatory review

Answer

To transfer all product risk to the customer

Question 3

A firm's risk committee charter should include which of the following elements?

Accepted Answer

Membership, mandate, meeting frequency, escalation procedures, and reporting lines

Answer

A list of all employees and their salaries

Answer

The firm's marketing strategy

Answer

Detailed IT system architecture

Question 4

The concept of 'risk ownership' in operational risk governance means:

Accepted Answer

Business unit managers are accountable for managing the risks within their areas

Answer

The risk department owns all risks enterprise-wide

Answer

Risk ownership rotates annually among executives

Answer

External auditors own risk findings until resolved

Question 5

Which metric is most directly used to monitor whether a firm is operating within its stated risk appetite?

Accepted Answer

Key Risk Indicators (KRIs) linked to risk appetite thresholds

Answer

Total revenue growth rate

Answer

Number of employees trained on compliance

Answer

Credit default swap spreads

Question 6

Under sound operational risk governance, how often should the risk appetite statement typically be reviewed?

Accepted Answer

At least annually and after significant business or risk profile changes

Answer

Every five years on a fixed schedule

Answer

Only when a major loss event occurs

Answer

Whenever the CFO requests a review