CORES CORES Governance Frameworks & Risk Appetite 3

Question 1

What is the primary risk of having an overly aspirational (i.e., too low) operational risk appetite?

Accepted Answer

Business units may conceal losses to avoid appearing non-compliant with the stated appetite

Answer

The firm will take on excessive operational risk

Answer

Regulators will increase capital requirements immediately

Answer

The board will lose interest in risk oversight

Question 2

Which of the following best describes the role of the Chief Risk Officer (CRO) in operational risk governance?

Accepted Answer

Setting the overall risk management framework and providing independent oversight of risk-taking activities

Answer

Approving every individual business transaction above a set threshold

Answer

Managing IT infrastructure and cybersecurity teams directly

Answer

Serving as the primary liaison with external rating agencies only

Question 3

A governance gap where no single owner is accountable for an operational risk is best described as:

Accepted Answer

An orphan risk

Answer

A residual risk

Answer

A transfer risk

Answer

A tail risk

Question 4

Which principle of sound governance requires that risk management activities be documented and available for review?

Accepted Answer

Transparency and auditability

Answer

Profit maximization

Answer

Risk avoidance

Answer

Decentralized decision-making

Question 5

When a firm's operational risk profile materially changes due to a major acquisition, what governance action is most immediately required?

Accepted Answer

Reassessing and potentially revising the risk appetite statement and ORMF

Answer

Freezing all risk management activities until integration is complete

Answer

Transferring risk ownership entirely to the acquired entity

Answer

Notifying all customers of the increased risk exposure

Question 6

The 'tone at the top' in operational risk governance specifically refers to:

Accepted Answer

Senior leadership demonstrating commitment to risk culture through behavior, messaging, and resource allocation

Answer

The loudest voice in risk committee meetings

Answer

The regulatory examination rating assigned to senior management

Answer

The strictness of written risk policies