CORES Operational Risk Identification & Assessment 4

Question 1

A 'near miss' event in operational risk management is BEST described as:

Accepted Answer

An incident that could have caused a loss but did not due to luck or intervention

Answer

Near-miss events reveal system vulnerabilities without causing actual loss, making them valuable early warning signals when captured and analyzed.

Question 2

When using the bow-tie method for operational risk, the 'barrier' on the left side of the event represents:

Accepted Answer

Preventive controls that reduce the likelihood of the hazard causing the event

Answer

Left-side barriers (threat barriers) in a bow-tie diagram are preventive controls designed to stop a hazard from escalating into a top event.

Question 3

Which risk assessment dimension evaluates how difficult it would be for the firm to detect an operational risk event once it has occurred?

Accepted Answer

Detectability

Answer

Detectability assesses the ease or difficulty of identifying that a risk event has taken place, influencing how quickly the firm can respond.

Question 4

A firm conducts top-down risk identification by having the board and senior executives identify key risks facing the organization. The MAIN limitation of this approach is:

Accepted Answer

It may overlook granular, process-level risks that are visible only at the operational level

Answer

Top-down identification captures high-level risks efficiently but may miss the detailed, day-to-day operational risks that front-line staff encounter.

Question 5

The expected loss (EL) in operational risk is calculated as:

Accepted Answer

Probability of Loss × Severity of Loss

Answer

Expected Loss equals the probability (likelihood) of an event multiplied by the severity (impact) of the loss if the event occurs.

(CORES) Certified Operational Risk Executive Specialist Practice Test

(CORES) Certified Operational Risk Executive Specialist Practice Test

CORES Operational Risk Identification & Assessment 4