Preview Questions Risk Manager | Role Specific Skill

Question 1: Which risk management framework is commonly used to ensure that a bank's strategic plan aligns with regulatory requirements?

Which action should you take?

Choose only one option

The Basel III framework

The Risk-Adjusted Return on Capital (RAROC) model

The Value-at-Risk (VaR) approach

The Capital Asset Pricing Model (CAPM)

Question 2: In operational risk assessment, which tool is typically used to evaluate the frequency and severity of potential risks?

Which action should you take?

Choose only one option

Monte Carlo simulations

Loss distribution approach

Hedging strategies

Value-at-Risk

Question 3: In the context of credit portfolio management, which risk metric would be most effective in assessing the overall exposure of a loan portfolio?

Which action should you take?

Choose only one option

Loan-to-value ratio

Expected Loss (EL)

Debt-service coverage ratio

Portfolio diversification index

Question 4: What is the minimum capital conservation buffer required under Basel III to ensure banks can absorb shocks during financial stress?

Which action should you take?

Choose only one option

2.50%

5%

4%

1%

Question 5: How does dynamic hedging help mitigate market risk in a volatile environment?

Which action should you take?

Choose only one option

By reducing the overall exposure to risky assets

By holding a fixed hedge position throughout the market cycle

By avoiding risk altogether

By adjusting the hedge position in response to market movements

Question 6: What is the purpose of conducting a risk inventory in a financial institution?

Which action should you take?

Choose only one option

To assess regulatory compliance

To prioritize business objectives

To catalog all existing and potential risks

To calculate the cost of risk mitigation