University: AMITY Year: 2015
Section A
Any three
1 .
Evaluate the factors to be considered while framing an operational risk policy for a bank.
2 .
How would you arrive at capital requirement of banks for the purpose of operational risk coverage?
3 .
On being a bank manager in a reputed bank, list down the steps to be initiated by banks for fraud detection.
4 .
How long could each business activity be unavailable for (either completely or partially) before a business would suffer?
5 .
How often does the company refresh its assessment of the top risks?
6 .
It’s hard to make the business case to invest more resources on risk management when the results can’t be measured. How it can be measured for the avoided costs from an improved risk assessment?
7 .
Analyse the details that how one can apply the principles of risk management to a personal risk management program.
8 .
Why might the risk manager of a corporation interact with the accounting department and the marketing department?
Section B
Case Detail :
EADS is one of the world’s leading international aeronautical, space and defence industry companies. The organisation has a holding group governance structure based on four divisions: Airbus, Astrium, Cassidian and Eurocopter. EADS is a multi-national and multi-cultural company which relies on a unique community of passionate people united under a common entity, driven by innovation and pride in its world-class products.
The Challenge before Active Risk Manager
EADS was formed from a number of existing European companies all with a different approach to risk management. This resulted in numerous risk silos each with its own ecosystem, language and practices. This fragmented view of risk led to duplication of work especially when a group-wide view of risk was required. Therefore in 2008, EADS management introduced a mission for true enterprise risk management (ERM) to address:
The need for higher risk consciousness, meaning that risk and opportunity management should be a part of the corporate culture and understood as everyone’s task
The need for a common language for risk to save time and confusion
The ability to overcome isolated risk pictures – to get a full view of risks in multiple programmes, functions and processes to provide an aggregated group view of risk
The need to have common objectives and understand the impact of potential risks on those objectives
The Solution with Active Risk Manager
One pillar to reach these goals was the decision to use a group wide IT tool to support the Enterprise Risk Management approach within EADS. As a result EADS selected Active Risk Manager (ARM) from Active Risk to help consolidate and integrate enterprise risk management across the group, to present a meaningful view of risk and to assist management decision making.
Following a pilot phase, in 2010 ARM 5 provided the functionality and security EADS required to pull together risk management information across multiple networks and entities. Security was important to EADS, because of its many government contracts in the military sector where certain principles have to be met.
Active Risk Manager is now the first group-wide standard software implementation with the same base configuration within EADS. The solution achieves the objectives set out in the mission for enterprise risk management for integration both at a risk and company level.
Benefits from using Active Risk Manager:
Active Risk Manager will support thousands of users on a daily basis which means it is a robust and well accepted system
The aggregation and consolidation of data over many networks and server systems delivers an integrated risk management and reporting process
A common risk language saves time and ensures accuracy of data
The flexibility and security of Active Risk Manager supports the specific needs of customers especially those in the military sector
ARM supports the COSO standard which was mandatory in a programme-driven company such as EADS
ARM enables compliance with the legal requirements of the Dutch corporate governance code (EADS is registered in The Netherlands)
The Results from Using Active Risk Manager
EADS has built a strong risk management network based on Active Risk Manager. The Group has achieved greater transparency and as a result has reduced duplication and now benefits more from strong best practice and knowledge sharing. ARM provides a full view of risk in programmes, functions and processes. Risk is aggregated to provide a meaningful picture to facilitate improved decision making, therefore maintaining business value while adding competitive advantage. ARM ensures that the corporate objectives set out in the mission for enterprise risk are being met for raised risk awareness, a common risk language and risk objectives and the ability to provide an accurate consolidated view of risk.
Que.1 Discuss in detail about EADM.
Que. 2 What are the goals of the true enterprise risk management (ERM) in EADM?
Que. 3 List out the benefits of Active Risk Manager.
Section C
Question No. 1
Marks - 10
The process under Process Risk Management that prioritizes risks for further analysis or action by assessing and combining their probability of occurrence and impact is called
Options
Perform Qualitative Risks Analysis
Perform Quantitative Risk Analysis
Plan Risk Management
Plan Risk Responses
Question No. 2
Marks - 10
The inputs used in the process of Perform Qualitative Risk Analysis includes all except:
Options
Scope Baseline
Risk Register
Quality Management Plan
Risk Management Plan
3.
A risk is defined as ____________ event or condition that, if it occurs, has a positive or negative effect on one or more project______________.
Options
indefinite, probabilities
uncertain, objectives
sure, goals
definite, uncertainties
4.
When is the risk and uncertainty in a project's life cycle at the highest?
Options
start
design
closing
implementation
5.
A new project that was initiated, involved new technology and had never been done before. What type of contract would the owner want to issue to reduce or eliminate as much risk as possible?
Options
fixed price
Cost plus fix fee
Cost plus incentive fee
Time and Material
6.
The process of Control Risks does not have one of the following as an output. Which one is it?
Options
Work Performance Information
Change Requests
OPA updates
Risk Register
7.
Which of the following fit the category of external risks?
Options
Project delays, budget under-runs, movement of city utilities
Regulatory, currency changes, taxation
Natural disasters, regulatory, design
Inflation, design, social impact
8.
Decision trees are best used for :
Options
Determining the interaction of the amount at stake and the expected value
Association of the probabilities with the risk events
Calculating the average outcome when the future includes scenarios that may or may not happen
A flow chart which determines the standard deviation of the risk event
9.
The total amount of risk that is calculated for a project is found by
Options
Multiplying the sum of each the risk times the amount at stake
Calculating the cumulative sum of the probability for each risk and multiplying this value times the consequence of occurrence of the risk events
Cannot be calculated since all risks are not known
The amount of project reserves available
10.
The strategy used under Strategies for Positive Risks or Opportunities that is used to increase the probability and/or the positive impacts of an opportunity is called.
Options
Share
Accept
Enhance
Exploit
11.
The process of implementing risk responses plans, tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project is called?
Options
Plan Risk Responses
Control Risks
Identify Risks
Perform Qualitative Risk Analysis
12.
The measure along the level of uncertainty or the level of impact at which a stakeholder may have a specific interest. Below that, the organization will accept the risk, and above this measure the organization will not accept the risk. It is known as
Options
Risk Threshold
Risk Appetite
Risk Tolerance
None of the above
13.
Which of the following tools and techniques is not used in the process of Identify Risks
Options
SWOT Analysis
Diagramming Techniques
Checklist Analysis
Risk Categorization
14.
The tools and techniques used in the process of Plan Risk Responses includes all except
Options
Contingent Response Strategies
Risk and Impact Matrix
Strategies for positive risks or opportunities
Expert Judgment
15.
A stakeholder risk profile analysis may be performed to grade and qualify the project stakeholder risk appetite and tolerance. The activity is an example of which technique used in the process of Plan Risk Management
Options
Meetings
Expert Judgment
Analytical Techniques
Both B& C
16.
The Risk Management Plan, which is the outcome of the process Plan Risk Management includes all except
Options
Methodology
Roles and Responsibilities
Budgeting
Tracking
17.
The technique used under the Quantitative Risk Analysis which is a statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen is known as
Options
Sensitivity Analysis
Expected Monetary value Analysis
Modeling and Simulation
Expert Judgmen
18.
The technique used under the Quantitative Risk Analysis that translates the specified detailed uncertainties of the project into their potential impact on project activities is called
Options
Expected Monetary value Analysis
Modeling and Simulation
Expert Judgment
Sensitivity Analysis
19.
A risk response strategy used under tool of Strategies for negative Risks or Threats through which the project team decides to acknowledge the risk and not take any action unless the risk occurs is called
Options
Mitigate
Transfer
Accept
Avoid
20.
Which bank is the sponsor of Prathama Gramin Bank?
Options
Bank of Baroda
Indian Bank
Punjab National Bank
Syndicate Bank
21.
Which of the following is not a public sector bank in India?
Options
Andhra Bank
Federal Bank
IDBI Bank
Vijaya Bank
22.
Which one of the following does not belong to the main products of life insurance?
Options
Endowment
Personal accident insurance
Term
Whole life
23.
Which one of the following does not belong to the major general insurance private sector companies in India?
Options
Bajaj Allianz General Insurance
Reliance General Insurance
Royal Sundaram Alliance Insurance
The Oriental Insurace Company
24.
When was the Oriental Life Insurance Company established?
Options
1818
1834
1907
1938
25.
With the ___________________, premiums are invested in stock, bond, or money market funds, and the value of the policy changes in accordance with investment performance.
Options
group life insurance
credit life insurance
variable life insurance
commercial multiple peril insurance
26.
he largest item on the liability side of the balance sheet for life insurance companies is:
Options
policy loans
unearned premium
surrender value
policy reserves
27.
The __________________ combines pure life insurance with a savings element. If the insured lives to some specified time, he/she receives the policy's face value.
Options
industrial life policy
P&C policy
credit life policy
endowment life policy
28.
In property/casualty insurance, the actual losses incurred on an insurance line, divided by the premiums earned, is called the:
Options
long-tail loss
loss ratio
combined ratio
operating ratio
29.
A/an _________________ will pay a beneficiary a fixed amount, periodically, over some specified period of time.
Options
annuity
credit life policy
policy loan
industrial life policy
30.
Loans made by a life insurance company to its own policy holders are called:
Options
endowments
surrender value loans
policy loans
ordinary life loans
31.
The customers most eager to apply for an insurance contract will be those most likely to have a claim against the insurance company. This is the essence of the _______________ problem in insurance.
Options
capital adequacy
mis-matched maturity
liquidity
adverse selection
32.
______________ is a problem that can arise in the insurance business. The source of the problem is the customer's behavior after an insurance contract is in place.
Options
Risk arbitrage
Moral hazard
Mis-matched security maturities
Adverse selection
33.
Major lines of property-casualty insurance would include all of the following except:
Options
Homeowners multiple peril
Automobile liability
Fire insurance
Universal variable life
34.
_________________ is the term referring to a phenomenon in the property-casualty insurance business—when a claim may occur many years after the relevant insured event.
Options
Long-tail loss
Social inflation
Underwriting cycle
Adverse selection
35.
_________________ is the term referring to a phenomenon in the property-casualty insurance business—when a claim may occur many years after the relevant insured event.
Options
Long-tail loss
Social inflation
Underwriting cycle
Adverse selection
36.
_______________ is essentially insurance acquired by insurance companies.
Options
A long-tail loss
Investments in stock and bonds
Reinsurance
The McCarran Ferguson Act
37.
Guarantees for employer for the loss out of employee's dishonest is_____________.
Options
burglary insurance.
fidelity insurance
third party insurance.
medical insurance.
38.
Motor insurance has its beginning in the__________.
Options
USA
USSR.
UK.
UAE.
39.
Except life assurance the maximum term of other insurance is _________
Options
12 months
24 months.
6 months.
36 months
40.
The person who agrees to compensate the loss arising from the risk is called the__________
Options
Insurer.
Assurer.
Underwriter
All the above
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