CAIIB BFME Module B & C By Ashish Sir Class 14
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary objective of risk management in banks?
The primary objective is to identify, measure, monitor, and control risks to protect the bank's capital and earnings while supporting business growth within acceptable risk appetite limits.
What is the Standardised Measurement Approach (SMA) for operational risk capital?
A single non-model-based method combining business indicator and internal loss data.
What does Value at Risk (VaR) measure?
VaR measures the maximum potential loss in the value of a portfolio over a defined period for a given confidence interval, typically 95% or 99%.
What is Yield Curve Risk in the context of interest rate risk?
Risk arising from changes in shape or slope of the yield curve.
What is the difference between expected loss and unexpected loss?
Expected loss is the average loss anticipated over a period and is usually covered by provisioning and pricing, while unexpected loss is the deviation from the expected loss and is covered by economic capital.
What is Basis Risk in interest rate risk management?
Risk from imperfect correlation between rates on different instruments.
What are the three pillars of Basel III framework?
The three pillars are Pillar 1 (Minimum Capital Requirements), Pillar 2 (Supervisory Review Process), and Pillar 3 (Market Discipline through disclosure requirements).
What is Option Risk in the context of IRRBB?
Risk from embedded options in banking products like prepayment of loans.
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