Finastra Assessment Test Finastra Assessment Risk Management and Analytics 1

Question 1

What does Value at Risk (VaR) measure in financial risk management?

Accepted Answer

The maximum potential loss over a given time period at a specified confidence level

Answer

VaR quantifies the maximum expected loss over a specific time horizon at a given confidence level such as 95% or 99%.

Question 2

Which Finastra solution is primarily used for enterprise risk management?

Accepted Answer

Fusion Risk

Answer

Fusion Risk is Finastra's enterprise risk management platform covering credit, market, and liquidity risk.

Question 3

What is Basel III primarily concerned with in banking?

Accepted Answer

Capital adequacy, stress testing, and market liquidity risk

Answer

Basel III is a regulatory framework addressing bank capital adequacy, stress testing, and liquidity risk to strengthen the banking sector.

Question 4

In credit risk management, what does 'Probability of Default' (PD) represent?

Accepted Answer

The likelihood that a borrower will fail to meet debt obligations

Answer

PD is a key credit risk metric estimating the probability that a borrower will default on their obligations within a specified period.

Question 5

What is liquidity risk in the context of banking?

Accepted Answer

The risk that a bank cannot meet its short-term financial obligations

Answer

Liquidity risk arises when a bank cannot meet its short-term obligations due to an inability to convert assets to cash quickly enough.

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