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Guide for 8010: PRMIA Operational Risk Manager (ORM)

Quiz 8010: PRMIA Operational Risk Manager (ORM)

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/ 10

Quiz

1/10
Which of the following statements are true ?
I. Risk governance structures distribute rights and responsibilities among stakeholders in the
corporation
II. Cybernetics is the multidisciplinary study of cyber risk and control systems underlying information
systems in an organization
III. Corporate governance is a subset of the larger subject of risk governance
IV. The Cadbury report was issued in the early 90s and was one of the early frameworks for corporate
governance
Select the answer
1 correct answer
A.
I, II and IV
B.
I and IV
C.
II and III
D.
All of the above
E.
Risk governance structures distribute rights and responsibilities among stakeholders in the corporation II. Cybernetics is the multidisciplinary study of cyber risk and control systems underlying information systems in an organization III. Corporate governance is a subset of the larger subject of risk governance IV. The Cadbury report was issued in the early 90s and was one of the early frameworks for corporate governance A. I, II and IV

Quiz

2/10
Which of the following are a CRO's responsibilities:
I. Statutory financial reporting
II. Reporting to the audit committee
III. Compliance with risk regulatory standards
IV. Operational risk
Select the answer
1 correct answer
A.
I and II
B.
II and IV
C.
III and IV
D.
All of the above
E.
Statutory financial reporting II. Reporting to the audit committee III. Compliance with risk regulatory standards IV. Operational risk A. I and II

Quiz

3/10
Which of the following statements are correct?
I. A reliance upon conditional probabilities and a-priori views of probabilities is called the
'frequentist' view
II. Knightian uncertainty refers to things that might happen but for which probabilities cannot be
evaluated
III. Risk mitigation and risk elimination are approaches to reacting to identified risks
IV. Confidence accounting is a reference to the accounting frauds that were seen in the past decade
as a reflection of failed governance processes
Select the answer
1 correct answer
A.
II, III and IV
B.
II and III
C.
I and IV
D.
All of the above
E.
A reliance upon conditional probabilities and a-priori views of probabilities is called the 'frequentist' view II. Knightian uncertainty refers to things that might happen but for which probabilities cannot be evaluated III. Risk mitigation and risk elimination are approaches to reacting to identified risks IV. Confidence accounting is a reference to the accounting frauds that were seen in the past decade as a reflection of failed governance processes A. II, III and IV

Quiz

4/10
Which of the following statements are correct in relation to the financial system just prior to the
current financial crisis:
I. The system was robust against small random shocks, but not against large scale disturbances to key
hubs in the network
II. Financial innovation helped reduce the complexity of the financial network
III. Knightian uncertainty refers to risk that can be quantified and measured
IV. Feedback effects under stress accentuated liquidity problems
Select the answer
1 correct answer
A.
I, II and IV
B.
II and III
C.
I and IV
D.
III and IV
E.
The system was robust against small random shocks, but not against large scale disturbances to key hubs in the network II. Financial innovation helped reduce the complexity of the financial network III. Knightian uncertainty refers to risk that can be quantified and measured IV. Feedback effects under stress accentuated liquidity problems A. I, II and IV

Quiz

5/10
Which of the following statements is true:
I. Basel II requires banks to conduct stress testing in respect of their credit exposures in addition to
stress testing for market risk exposures
II. Basel II requires pooled probabilities of default (and not individual PDs for each exposure) to be
used for credit risk capital calculations
Select the answer
1 correct answer
A.
I
B.
I & II
C.
II
D.
Neither statement is true
E.
Basel II requires banks to conduct stress testing in respect of their credit exposures in addition to stress testing for market risk exposures II. Basel II requires pooled probabilities of default (and not individual PDs for each exposure) to be used for credit risk capital calculations A. I

Quiz

6/10
Which of the following is a measure of the level of capital that an institution needs to hold in order to
maintain a desired credit rating?
Select the answer
1 correct answer
A.
Shareholders' equity
B.
Economic capital
C.
Regulatory capital
D.
Book value

Quiz

7/10
Which of the following statements are true:
I. Capital adequacy implies the ability of a firm to remain a going concern
II. Regulatory capital and economic capital are identical as they target the same objectives
III. The role of economic capital is to provide a buffer against expected losses
IV. Conservative estimates of economic capital are based upon a confidence level of 100%
Select the answer
1 correct answer
A.
I and III
B.
I, III and IV
C.
III
D.
I
E.
Capital adequacy implies the ability of a firm to remain a going concern II. Regulatory capital and economic capital are identical as they target the same objectives III. The role of economic capital is to provide a buffer against expected losses IV. Conservative estimates of economic capital are based upon a confidence level of 100% A. I and III

Quiz

8/10
When combining separate bottom up estimates of market, credit and operational risk measures, a
most conservative economic capital estimate results from which of the following assumptions:
Select the answer
1 correct answer
A.
Assuming that the resulting distributions have a correlation between 0 and 1
B.
Assuming that market, credit and operational risk estimates are perfectly positively correlated
C.
Assuming that market, credit and operational risk estimates are perfectly negatively correlated
D.
Assuming that market, credit and operational risk estimates are uncorrelated

Quiz

9/10
The Options Theoretic approach to calculating economic capital considers the value of capital as
being equivalent to a call option with a strike price equal to:
Select the answer
1 correct answer
A.
The notional value of the debt
B.
The market value of the debt
C.
The value of the firm
D.
The value of the assets

Quiz

10/10
Economic capital under the Earnings Volatility approach is calculated as:
Select the answer
1 correct answer
A.
Expected earnings/Specific risk premium for the firm
B.
[Expected earnings less Earnings under the worst case scenario at a given confidence level]/Required rate of return for the firm
C.
Earnings under the worst case scenario at a given confidence level/Required rate of return for the firm
D.
Expected earnings/Required rate of return for the firm
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  • Quiz name:8010: PRMIA Operational Risk Manager (ORM)
  • Total number of questions:240
  • Number of questions for the test:50
  • Pass score:80%

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