GARP GARP Certifications ICBRR Questions & Answers

• Question 21:

  Which one of the following areas does not typically report into a central operational risk function?

  A. Business continuity planning

  B. Information security

  C. Geopolitical and strategic planning

  D. Embedded operational risk coordinators or specialists or managers

  Correct Answer: C

• Question 22:

  Which one of the four following statements regarding minimum loss data standards is not correct?

  A. The loss data entry must include the actual loss amount.

  B. The loss data program must comprehensively capture all material activities.

  C. The loss data entry should only include the date when the event was reported.

  D. The loss data entry may include descriptive information about the drivers or causes of the loss event.

  Correct Answer: C

• Question 23:

  Bank Omega is using futures contracts on a well capitalized exchange to hedge its market risk exposure. Which of the following could be reasons that expose the bank to liquidity risk?

  A. The bank may not be able to unwind the futures contracts before expiration.

  II. Prices may move such that a loss results on the hedge.

  III. Since futures require margins which are settled every day, the bank could find itself scrambling for funds.

  IV. Exchange margin requirements could change unexpectedly.

  B. III, IV

  C. I, III, IV

  D. I, II, III, IV

  E. I, IV

  Correct Answer: A

• Question 24:

  BetaFin has decided to use the hybrid RCSA approach because it believes that it fits its operational framework. Which of the following could be reasons to use the hybrid RCSA method?

  A. BetaFin has previously created series of RCSA workshops, and the results of these workshops can be used to design the questionnaires.

  II. BetaFin believes that using the questionnaire approach should be more useful.

  III. BetaFin had used the questionnaire approach successfully for certain businesses and the workshop approach for others.

  IV. BetaFin had already implemented a sophisticated RCSA IT-system.

  B. I and II

  C. I and III

  D. III and IV

  E. II, III, and IV

  Correct Answer: B

• Question 25:

  Which of the following reports have been suggested by the FDIC that banks should produce in addition to the usual probabilistic analysis and stress tests in order to gauge liquidity issues?

  A. Cash flow gaps

  II. Funding availability

  III. Critical assumptions used in credit projections

  B. I, II

  C. I, II, III

  D. I

  E. I, III

  Correct Answer: B

• Question 26:

  The operational risk policy should include:

  A. The firm's definition of risk

  II. The governance of operational risk including who owns it, what it owns, and how issues should be escalated

  III. The main activities and elements that are managed by the operational risk function

  B. I, II

  C. I, III

  D. II, III

  E. I, II, III

  Correct Answer: D

• Question 27:

  Which one of the following four regulatory drivers for operational risk management includes risk and control requirements for financial statements in the United States?

  A. Basel II Accord

  B. Solvency II

  C. The Markets in Financial Instruments Directive

  D. The Sarbanes-Oxley Act

  Correct Answer: D

• Question 28:

  SigmaBank has many branches that offer the same products and services. Which one of the four following statement presents an advantage of using RCSA questionnaire approach in the SigmaBank's operational risk framework?

  A. The questionnaires are usually sent to specific nominated parties for completion.

  B. This approach ensures that there has been full participation in the scoring, rather than a single view.

  C. It provides a forum for an in-depth discussion of the operational risks in the firm.

  D. The results can be collected electronically and the responses compared to identify themes, trends and areas of potential control weakness or elevated risk.

  Correct Answer: D

• Question 29:

  Which of the following are among the main uses of risk reports?

  A. Identification of exceptional situations that require managerial attention.

  II. Display the relative risk among different trades.

  III. Specify how RAROC will be maximized within the bank.

  IV. Estimate the overall risk levels of the bank.

  B. I, II and IV

  C. II and III

  D. II and IV

  E. II, III, and IV

  Correct Answer: A

• Question 30:

  What are the add-on losses faced by a bank that is going bankrupt?

  A. The discount accepted by the bank for selling its assets in a fire sale.

  II. The increased cost of funding liabilities in a financially distressed situation.

  III. The reduction in the present value of future growth opportunities.

  IV. Loss of goodwill and intangible assets.

  B. I, II

  C. II, III, IV

  D. III, IV

  E. I, II, III, IV.

  Correct Answer: D