CORES Operational Risk Identification & Assessment 5

Question 1

Which assessment method is MOST appropriate for estimating potential operational losses in a business line that has never experienced a major loss event?

Accepted Answer

Forward-looking scenario analysis using expert judgment

Answer

When internal loss history is absent, scenario analysis leverages expert judgment to estimate the likelihood and impact of potential severe events.

Question 2

The 'four-eyes principle' in operational risk control design primarily mitigates which risk category?

Accepted Answer

Internal fraud and errors

Answer

The four-eyes (dual-authorization) principle requires two people to review and approve actions, reducing the risk of internal fraud and undetected errors.

Question 3

A firm's operational risk function receives a new product proposal. The FIRST risk identification step should be to:

Accepted Answer

Map the end-to-end process of the new product to identify where risks could arise

Answer

Process mapping a new product from inception to settlement reveals risk points before the product is launched, enabling proactive control design.

Question 4

Which of the following BEST illustrates a 'concentration risk' in an operational context?

Accepted Answer

Multiple business lines relying on a single critical third-party vendor

Answer

Operational concentration risk arises when a single point of failure — such as one critical vendor — can simultaneously disrupt multiple business lines.

Question 5

The residual risk rating in an RCSA is determined by:

Accepted Answer

Evaluating the level of risk remaining after considering the effectiveness of existing controls

Answer

Residual risk reflects what is left after applying and accounting for the effectiveness of all current mitigating controls.

(CORES) Certified Operational Risk Executive Specialist Practice Test

(CORES) Certified Operational Risk Executive Specialist Practice Test

CORES Operational Risk Identification & Assessment 5