Introduction to Risk Management

Which of the following actions can be termed as risks?

• Banks giving loans with the hope that they would be repaid

• Banks avoiding giving loans to farmers

• Banks having a shortage of liquid funds

• Daily operations of a bank

Risk is known as ___________ of an event

Which of the following actions can comes under the process of identifying a risk?

• Asking for a collateral security from the loan applicant

• Getting the details of the number of dependents of a loan applicant

• Getting information on the existing loans of a loan applicant

• Fixing a higher rate of interest for a borrower

Which of the following actions of a bank would come under the process of analyzing the risk?

• Calculating the risk rating of a borrower based on the loan application

• Receiving the loan application

• Deciding to give the loan at a higher rate of interest

• Determining the value of a collateral security

Which of the following is NOT a risk mitigation strategy?

• Transfer

• Avoid

• Reassign

• Accept

Select the correct order of actions in the risk management process.

• Identify - monitor - analyze - mitigate - report

• Analyze - identify - monitor - mitigate - report

• Identify - analyze - mitigate - monitor - report

• Identify - analyze - report - mitigate - monitor

A shopkeeper fixes CCTV in the premises of his shop. This action pertains to

• Risk identification

• Risk mitigation

• Risk control

• Risk reporting

A, B, and C are three borrowers who apply for a loan. After receiving all the documents and going through them the bank finds that

i) A is least risky,

ii) B is slightly risky but he is willing to give a collateral, and

iii) C is a highly risky borrower

This action of the bank falls under

• Risk identification

• Analyzing the risk

• Controlling the risk

• Reporting the risk

Banks have to disclose their NPA position to RBI and other credit monitoring institutions like CRILC. This action falls under

• Risk monitoring

• Risk reporting

• Risk analyzing

• Risk identification

Which of the following risks is/are peculiar to the banking business?

• Liquidity risk

• Market risk

• Operational risk

• Credit risk