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 PRACTICE BOOK» NOT FOR SALE
Contents

1 OPERATIONAL RISK MANAGEMENT . . . . . . . . . . . . . . . . . . 2

1.1 OPERATIONAL RISK MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 2
 1. OPERATIONAL RISK

NARAYAN CHANGDER
MANAGEMENT

1.1 OPERATIONAL RISK MANAGEMENT

1. What are the affecting factors which influ- 4. What is an important aspect of transport-
ence operational activities as well as the ing NJROTC cadets to a drill meet?
Operational risk
A. Proper planning and execution
A. Nature of the company
B. Wearing the correct uniform
B. Laws and regulations
C. Bringing personal belongings
C. Stakeholder Value
D. Participating in physical training
D. All the above three factors

2. What does operational risk management 5. What is Loss Event Reporting (LER)?
involve? A. a facilitated process designed to eval-
A. Identifying potential risks and imple- uate operational risks, controls and con-
menting measures to mitigate them trol effectiveness, in order to establish
risk profile for the business/support units
B. Analyzing financial data to make in-
that can pinpoint significant risk for fur-
vestment decisions
ther monitoring, with a view to change and
C. Developing marketing strategies to at- improve
tract new customers
B. an audit program tool to validate the
D. Creating employee training programs effectiveness of controls measures by ap-
plying sampling checks.
3. A business has a poor reputation among
customers, this would be considered to be C. tool to monitor and manage key opera-
a(n) tional risk exposures over time
A. Strength D. a process for reporting and moni-
B. Weakness toring operational risk loss incidents in-
cluding service disruption to system fail-
C. Opportunity ure, secrecy breach and Shariah Non-
D. Threat Compliance.

1. D 2. B 3. B 4. B 5. D
1.1 OPERATIONAL RISK MANAGEMENT
E. a systematic process in the creation
of plausible operational risk events and is
an essential element in operational risk
management and measurement. It is
a forward-looking risk management tool
that examines and explores emerging tail-
end events, which are usually low fre-
quency and have a high impact.
6. Based on market best practice, which
method provides foundation and frame-
work for linking and integrating Opera-
tional risk to enterprise Risk Management
A. ISO9001
B. ISO31000
C. ISO37000
D. ISO26000
7. “Your” bank in the city of Poso was so
badly damaged by the earthquake that it
could not operate and had to be immedi-
ately moved to an alternate site. That is
an example of operational risk due to:
A. system failure
B. external events
C. human error.
D. Process weaknesses.
8. What is risk management?
A. Riskmanagement is the identification
of potential hazards and that
B. Risk management is identifying the sol-
diers and all their belongings
C. Risk management is the process of
identifying and controlling hazards to keep
soldiers and their belongings safe.
D. none of above
9. Risks are events that have not (might)
yet occur that have a potential impact on
achieving goals. According to this defini-
tion, which of the following statements
constitutes a risk:
6. B 7. B 8. C 9. C 10. B
3
A. Experts and regulators predict eco-
nomic conditions that will enter a crisis pe-
riod.
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B. Work accident that caused one em-
ployee to be injured.
C. Bad loans that do not have collateral.
D. Bank ATM damaged due to vandalism.
10. How many types of risk are there?
A. 4
B. 2
C. 3
D. none of above
11. Which on eof the following main Risk Man-
agement functions statement is FALSE
A. Risk Management will provide a frame-
work to assure that operational activities
are consistently conducted under control
B. Improve organizational learning
C. Improve the process effectiveness of
decision making, planning and prioritizing
business or project activity
D. Improve auditing process
12. Choose which one is the correct or-
der of numbers as standard ISO31000
process:(1) Risk Treatment(2) extablish-
ing Context(3) Risk Identification(4) Risk
Evaluation(5) Risk Analysis
A. , (2), (5), (4), (1)
B. , (1), (5), (4)
C. , (3), (5), (4), (1)
D. , (5), (4 , (1), (3)
13. You see two white lights in a line, and
one red light off your starboard bow. You
should:
A. Alter your course to starboard (right)
B. Alter your course to port (left)
C. Maintain your current course
D. Turn off all lights
11. D 12. C 13. A 14. A
1.1 OPERATIONAL RISK MANAGEMENT 4

14. Inadequacy or non-functioning of the fol- of the effectiveness of the risk manage-
lowing factors can give rise to Operational ment framework
Risks, except: D. none of above
A. Internal Events
18. Below are Operational Management Risk
B. Proses Internal Tools for FUTURE events:
C. Human error A. Control Self-assessment (CSA) / Key
D. System Control Standard (KCS)

NARAYAN CHANGDER
B. Risk & Control Self-Assessment
15. What is not a definition of risk is as fol-
(RCSA)
lows:
C. Operational Risk Scenario Analysis
A. The possibility of an unexpected result
(ScAn)
occurring
D. Key Risk Indicator (KRI)
B. Potential events that have a negative
impact on the Bank’s income and capital E. Loss Event Reporting (LER)
C. The probability of a desired outcome 19. What must be considered to ensure that
occurring the cadets arrive on time?
D. Potential losses due to the occurrence A. Weather conditions
of an event
B. Uniform requirements
16. What is the risk management process? C. Food arrangements
A. Assess risks-Identify risk-Develop D. Transportation logistics
controls and make decisions-Implement
controls-Supervise and evaluate- 20. Below are Operational Management Risk
Tools for PRESENT events:
B. Identify risks-Supervise and evaluate-
Develop controls and make decisions- A. Control Self-assessment (CSA) / Key
Implement controls-Risk assessment- Control Standard (KCS)
C. Identify risks-Assess risk-Develop B. Risk & Control Self-Assessment
controls and make decisions-Implement (RCSA)
controls-Supervise and evaluate- C. Operational Risk Scenario Analysis
D. none of above (ScAn)
D. Key Risk Indicator (KRI)
17. What is the role of COMPLIANCE TEAM in
Operational Risk Management? E. Loss Event Reporting (LER)

A. co-ordinate, facilitate, assess and
oversee the effectiveness and integrity of
risk management and update Board and
Management on risk related matters on
timely basis
B. responsible for the management and
control of day to day operational risk
21. There is a fictitious credit at KCP Mak-
mur amounting to IDR 100 million with
the method of falsifying the debtor’s iden-
tity by RM Awal for personal gain. RM
Awal reported this incident to Law Enforce-
ment Officials (APH). The risks faced by
KCP Makmur were:

C. provide independent assurance A. Business Risk

across all business functions in respect B. Legal Risk

15. C 16. C 17. A 18. B 18. C 19. D 20. A 20. D 21. C

1.1 OPERATIONAL RISK MANAGEMENT 5

C. Operational Risk B. complete the OPERATIONAL RISK

D. Reputational Risk EVENT REPORTING FORM and forward
it to Group Internal Auditors.

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22. Risks associated with the use of technol-
ogy and systems. Currently, all banks are
very dependent on systems and technol-
ogy to support their daily business activ-
ities, which is an operational risk because:
A. Internal Proses
B. People
27. Regarding Risk Loss and Risk Event, which
C. System
D. External
23. !Types of risk are
A. Tactical RiskAnnual Risk
B. Technical RiskHorizontal Risk
C. tactical riskaccidental risk
D. none of above
C. complete the OPERATIONAL RISK
EVENT REPORTING FORM and forward
it to Bank Negara Malaysia.
D. complete the OPERATIONAL RISK
EVENT REPORTING FORM and forward
it to Group Operation Risk Management.
of the following sentences is incorrect:
A. Risk loss occurs because of a risk
event
B. Risk loss can have both financial and
non-financial impacts
C. Risk events occur because of risk loss
D. Risk loss can have an impact on direct
or indirect losses

24. Which of the following risk statement is
catagorized as operational risk
A. PEOPLE RISK
B. SYSTEM RISK
C. PROCESS RISK
D. ALL THE STATMENTS
25. To express Operational risk, below state-
ment is FALSE
A. They are defined in clear & specific
sentence (not more than 10 words)
B. Understandable for people with differ-
ent background
C. Verb Form
D. Avoid specific technical terms/ jargon
and avoid abbreviation
26. If the Operational Risk event could not be
reported in OpRisk System timely due to
system unavailability, Operation Risk Co-
ordinator (ORC) is required to:
A. do nothing
28. Percentage of debtors with loan age < 6
months collectibility 2 (Special Mention).
This is example data:
A. Indication of Fraud Events
B. Loss Event Data
C. Risk & Control Self Assesssment
D. Key Risk Indicators
29. The following is the most appropriate
statement to explain KRI.
A. KRI is the same as Key Performance
Indicators (KPIs)
B. KRI provides early warnings to identify
potential events that could disrupt the con-
tinuity of an activity/project.
C. KRI measures qualitative operational
risk
D. KRI measures the risk exposure faced
by banks.
30. The risk is
A. loss and quality of danger or adverse
consequences

22. C 23. C 24. D 25. C 26. D 27. C 28. D 29. B 30. C

1.1 OPERATIONAL RISK MANAGEMENT
B. The chance of good or good results
C. the possibility of danger or bad conse-
quences
D. none of above
31. What is BCM?
A. Business Compliance Management
B. Business Contingency Management
C. Banking Continuity Management
D. Business Continuity Management
32. Which one of the following Risk Man-
agement is true:(1) Create and Protect
Value(2) Integral parts of Organizational
process(3) Part of decision making(4) In-
clusive and flexible approach
A. All statement are true
B. Only (1) AND (2)
C. (1), (2) and (3)
D. (1) and (3)
33. Hazard is
A. a situation that could damage or inter-
fere with the mission
B. A situation that does not cause dam-
age or interference to people, property
and the mission
C. a situation that could damage or inter-
fere with people, property and the mis-
sion
D. none of above
34. Why we should manage operational risks?
Please choose 3 answers *
A. Minimise operational losses
B. Achieve business objectives
C. Better business decision
D. Common industry practice
E. Reduce tax
31. D 32. C 33. C 34. A
6
35. What are some notable accomplishments
of Henry Kissinger?
A. Negotiating the Paris Peace Accords
to end the Korean War, receiving the No-
bel Peace Prize for his efforts in ending
the Korean War, playing a key role in the
establishment of diplomatic relations be-
tween the United States and Russia, and
NARAYAN CHANGDER
serving as the United States Secretary of
State under Presidents John F. Kennedy
and Lyndon B. Johnson.
B. Negotiating the Paris Peace Accords to
end the Vietnam War, receiving the No-
bel Peace Prize for his efforts in ending
the Vietnam War, playing a key role in the
establishment of diplomatic relations be-
tween the United States and China, and
serving as the United States Secretary of
State under Presidents Richard Nixon and
Gerald Ford.
C. Negotiating the Paris Peace Accords
to end the Cold War, receiving the Nobel
Peace Prize for his efforts in ending the
Cold War, playing a key role in the estab-
lishment of diplomatic relations between
the United States and North Korea, and
serving as the United States Secretary of
State under Presidents Jimmy Carter and
Ronald Reagan.
D. Negotiating the Paris Peace Accords
to end the Gulf War, receiving the Nobel
Peace Prize for his efforts in ending the
Gulf War, playing a key role in the estab-
lishment of diplomatic relations between
the United States and Iraq, and serving
as the United States Secretary of State un-
der Presidents George H. W. Bush and Bill
Clinton.
36. When would Risk Management be in-
volved in Operational Process?
A. At the begining of execution process
B. At the first strategic decision process
C. At the first initial strategic plan
34. B 34. C 35. B 36. C 37. A
1.1 OPERATIONAL RISK MANAGEMENT
D. During audit process and BOC meeting
37. Risk identification is carried out by analyz-
ing all sources of risk from the Bank’s prod-
ucts and activities, taking into account:
A. Functional activity coverage
B. Measurements to be taken
C. Risk Appetite dan Risk Tolerance
D. The sensitivity of the product/activity
to the factors that influence it
38. What is the purpose of performing a SWOT
Analysis?
A. Gives the management team a broader
view on the potential opportunity
B. Evaluates whether the business ven-
ture is a good idea.
C. Identifies internal and external factors
that may affect the business future perfor-
mance.
D. Access an organization’s performance
39. An increase in Minimum wage may impact
a business because
A. It will increase profits
B. It will increase total costs of the busi-
ness
C. It will increase consumer products
D. It will increase customers
40. Below are types of loss events except for:
A. Future loss
B. Potential loss
C. Near miss
D. Actual loss
41. why should the information be in the right
place?
A. costs of future.
B. to make good business decisions.
C. create a backup.
38. C 39. B 40. A 41. B
7
D. to contribute the productive working
relationship.
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42. The following are the reasons why Bank
requires BCM EXCEPT? *
A. To carry out the critical business func-
tions at a minimal resources during disas-
ter
B. Safeguard the Bank’s customers and
business partners
C. Protect the Bank’s image and reputa-
tion
D. Protect the banking industries
43. Great communication skills and analytical
abilities is an example of a type of
A. Strength
B. Weakness
C. Opportunity
D. Threat
44. What is the purpose of operational risk as-
sessment?
A. To identify potential hazards and de-
velop strategies to mitigate them
B. To evaluate the performance of
NJROTC Cadets in a drill meet
C. To analyze the financial risks associ-
ated with operational activities
D. To assess the environmental impact of
operational practices
45. what is business continuance plans?
A. the process of making planing strat-
egy.
B. the copying of physical or virtual files
or databases to a secondary location for
preservation in case of equipment failure
or catastrophe.
C. the steps that a company puts into
place to make sure it is capable of surviv-
ing.
D. none of above
42. D 43. A 44. A 45. C
1.1 OPERATIONAL RISK MANAGEMENT
46. What is crucial for safely transporting
NJROTC cadets to a drill meet?
A. Proper training of the cadets
B. The availability of transportation vehi-
cles
C. The weather conditions on the day of
the drill meet
D. The distance between the NJROTC unit
and the drill meet location
47. What is tactical risk?
A. Dangers and damage when working
with your own team and enemies
B. Risk while walking
C. Danger and damage from enemies or
adversaries
D. none of above
48. The Higgins Boat is what type of vessel?
A. Fishing boat
B. Yacht
C. Landing craft
D. Submarine
49. What are the objectives of Call Tree exer-
cise
A. To ensure that all staff are well-
informed in a structured and prompt man-
ner in the event of disaster.
B. To ensure that the overall call time
taken is within the stipulated time (120
minutes).
C. To ensure that the message is con-
veyed to staffs correctly.
D. All of the above
50. Please select the correct examples of the
causal factor contributing to operational
risk
A. Process:Inabsence of dual control
function (checker & maker process) for fi-
nancing
46. C 47. C 48. C 49. D
8
B. System:Non-maintenance of ATM/CDM
machine resulting to frequent breakdown.
C. External:Staff did not comply to inter-
nal policies and procedures
D. People:Non-comprehensive of SLA
(Service Level Agreement) between Bank
and vendor.
NARAYAN CHANGDER
51. To understand operational risk, one should
understand
A. Operational process, corporate envi-
ronment and the affecting factors
B. Operational process only
C. The affecting factors and regulations
only
D. No need to understand others, it just
needs to understand the operational risk
52. The three rules of risk management are
A. Profitability-Always reduce risk-
Decision making at every level-
B. Gains equal to losses-not taking unnec-
essary risks-making decisions at a deci-
sive level-
C. Benefits outweigh losses-Don’t take
unnecessary risks-Make decisions at a de-
cisive level-
D. none of above
53. What is one of the key activities in drill
meet preparation?
A. Briefing cadets on the schedule and
safety protocols
B. Conducting physical fitness training
C. Organizing transportation for the
cadets
D. Preparing the drill routines
54. 3X-18Y=Ahkset=?
A. -9
B. 18
C. 36
D. 9
50. A 51. A 52. C 53. B 54. D
1.1 OPERATIONAL RISK MANAGEMENT 9

55. The Operational Risk Management Pro- 60. In the SWOT analysis, Strengths and
cess includes: Weaknesses are what?

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A. Identification, Monitoring, Control,
Measurement
B. Identification, Measurement, Control,
Monitoring
C. Identification, Control, Measurement,
Monitoring
D. Identification, Measurement, Monitor-
ing, Control
56. Upon detection, all operational risk events,
including Shariah Non-Compliance (SNC)
are required to be reported within:
A. 1 working day
B. 2 working days
C. 3 working days
D. 4 working days
57. Who responsible to manage operational
risk?
A. Risk Owner and Risk Agent
B. Head of Department/ Branch Manager
C. Chief Risk Officer
D. All Staff
58. Which type of operational risk event is the
most challenging, namely unexpected loss:
A. Low frequency / Low impact
B. Low frequency / High impact
C. High frequency / Low impact
D. High frequency / High impact
59. Inherent risk is the risk inherent in bank ac-
tivities. To mitigate inherent risks, banks
apply:
A. Marketing Strategy
B. Business strategy
C. Marketing strategy
D. Internal Control
A. External Factors
B. Poor Planning
C. Internal Factors
D. Good Management
61. Which one of the following statements is
TRUE
A. To achieve goal setting, organization
should define their goal achievement
B. To set the strategy, organization
should identify the risks
C. To define the risks, organization
should define the opportunity
D. During setting up the strategy, organi-
zation should be focused on the opportu-
nity exploitation, instead of risks identifi-
cation
62. Risk of loss can result from inadequacy or
failure of items below, except for:
A. External events
B. Strategy
C. People
D. Internal control/processes
E. Systems
63. These are the principals of Operational
Risk Management processes, except for:
A. Mitigate and control
B. Identify
C. Inspect
D. Assess
E. Monitor & report
64. One example of operational risk due to
process inadequacies is:
A. Bank ATMs cannot operate because
the electricity is out and the backup gen-
erator is not functioning.

55. D 56. B 57. D 58. B 59. D 60. C 61. A 61. B 61. C 61. D 62. B 63. C
64. C
1.1 OPERATIONAL RISK MANAGEMENT
B. PT XYZ debtor’s bad credit because
the debtor’s business was affected by the
COVID 19 pandemic.
C. Home Ownership Credit in collabora-
tion with PT XYZ is stuck because there
is no MOU with PT
D. Bank X suffered losses due to the in-
crease in BI’s benchmark interest rate.
65. Changes in demographics results in shift-
ing demand away from products, this is
classified as a
A. Strength
B. Weakness
C. Opportunity
65. D 66. B
10
D. Threat
66. What is the role of BUSINESS SUPPORT
UNIT in Operational Risk Management?
A. co-ordinate, facilitate, assess and
oversee the effectiveness and integrity of
risk management and update Board and
Management on risk related matters on
NARAYAN CHANGDER
timely basis
B. responsible for the management and
control of day to day operational risk
C. provide independent assurance
across all business functions in respect
of the effectiveness of the risk manage-
ment framework
D. none of above