MCQs on Risk Management FY 2021-22

BCBS stands for

• Basel Committee for Banking Standard
• Basel Committee for Banking Supervision
• Basel Committee for Board Standard
• Basel Committee for Board Supervision

Under Basel II the option available to compute capital for credit risk are:-

• Risk management approach
• Basic Indicator Approach
• The standardized approach
• advance measurement approach

Exposure at Default is the

• Likelihood that a borrower would default over a given time horizon, usually a year
• Amount the borrowers owes to the bank at the time of default
• Loss on a credit facility that takes place when a borrower defaults
• Sanctioned limit

Supervisory Review Process (SRP) is:

• To ensure that bank have adequate capital to support all the risk in their business
• To encourage the banks to develop and use better risk management techniques
• both
• only A

BCBS aims at encouraging common approaches and standards, however does not issue binding regulations, which is left to the

• Individual Banks
• World Bank
• Individual Country Regulator
• International Monetary Fund

Which of the following is not one of three components of Risk Appetite?

• Risk Tolerance
• Risk Capacity
• Risk Posture
• Risk Dashboard

Which of the following is a method of Risk Adjusted Performance Measurement?

• Capital Rationalization
• RAROC
• Risk Strategy
• Risk Appetite

Which of the following is Credit risk mitigant that can be used by banks under Standardized approach for capital reduction?

• Collateral and risk aversions
• Guarantees and risk identification
• Collateral, Guarantees, credit derivatives
• Credit derivatives only

Capital charge computation is a function of which of the following parameters under IRB approach?

• Probability of Default
• Exposure at Default (EAD) &Loss Given Default(LGD)
• Maturity
• All the above

Threshold limit for reporting (in Rs) of near miss events

• 2500
• 3000
• 5000
• 10000