Operational Risk Management: A Complete Guide to a Successful Operational Risk Framework

APPENDIX

Answers to Review Questions

CHAPTER 1

1. c

2. a

CHAPTER 2

1. a

2. d

CHAPTER 3

1. c

2. b

CHAPTER 4

1. b

2. b

CHAPTER 5

1. b

CHAPTER 6

1. c

CHAPTER 7

1. c

2. b

3. e

4. d

CHAPTER 8

1. d

CHAPTER 9

1. b

CHAPTER 10

1. a

CHAPTER 11

1. c

2. a

CHAPTER 12

1. a

CHAPTER 13

1. c

CHAPTER 14

1. a

CHAPTER 15

1. d

CHAPTER 16

1. c

CHAPTER 17

1. b

CHAPTER 18

Case 1

ORX classified the event as outlined in Figure A.1:

FIGURE A.1 ORX Classification of Knight Capital Event

1. In the ORX standards, EL0601—Technology and infrastructure failure is a risk that relates to losses arising from disruption of business or system failures. This is equivalent to the Basel II risk category of Business Disruption and System Failure.

2.ORX states the main cause as CS0503—Software—Inadequate Maintenance.

3. ORX classify the business line as BL0201—Equities, which is a subset of their Trading and Sales business line category.

Case 2

FIRST classified the Standard Chartered event as shown in Figure A.2:

FIGURE A.2 FIRST Classification of Standard Chartered Event

4. FIRST classified this as an Execution, Delivery, and Process Management event.

5/6. FIRST provided helpful details on the event and the lessons learned. The full text of the event in FIRST is significantly longer than the excerpt provided.