CRA Operational Risk Events & KRIs 3

Question 1

A firm notices its 'system downtime hours per month' KRI is trending upward. Which Basel II event category is most directly implicated?

Accepted Answer

Business Disruption & System Failures

Answer

Increasing system downtime directly corresponds to Business Disruption & System Failures, which covers IT and infrastructure outages.

Question 2

In the context of operational risk, what does 'near-miss' event data provide?

Accepted Answer

Leading indicators of potential future losses without actual loss realization

Answer

Near-miss events reveal vulnerabilities and control weaknesses before losses materialize, making them valuable leading indicators.

Question 3

Which of the following KRIs would be most relevant for monitoring 'Employment Practices & Workplace Safety' risk?

Accepted Answer

Employee grievance and complaint filing rate

Answer

The rate of employee grievances directly signals workforce relations and workplace safety risks under the Employment Practices category.

Question 4

The Standardized Approach for operational risk capital under Basel II calculates capital as a percentage of:

Accepted Answer

Gross income segmented by business line

Answer

The Standardized Approach applies beta factors to gross income allocated to each of the eight defined business lines.

Question 5

A compliance officer reports an increase in the 'number of regulatory breaches per quarter' KRI. This is best described as:

Accepted Answer

A lagging indicator of operational risk

Answer

Regulatory breaches are lagging indicators because they reflect failures that have already occurred, rather than predicting future risk.

(CRA) Certified Risk Analyst Practice Test