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

An operational risk policy establishes the overarching principles, roles, responsibilities, and minimum standards that all business units must follow.

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

New product approval processes embed operational risk review so that risks are identified and controls are established before launch, not after incidents occur.

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 risk committee charter formalizes the committee's purpose, membership, operating procedures, and how it escalates issues and reports to the board.

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

Risk ownership assigns accountability to business unit managers, ensuring that those closest to the risk have responsibility for managing and monitoring it.

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

KRIs are calibrated to risk appetite thresholds so that breaches signal when the firm is approaching or exceeding acceptable risk levels.

(CORES) Certified Operational Risk Executive Specialist Practice Test

(CORES) Certified Operational Risk Executive Specialist Practice Test

CORES CORES Governance Frameworks & Risk Appetite 2