CAIIB BFME Module B & C By Ashish Sir Class 2
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 66 rapid-fire Q&A cards.
What is the primary objective of Risk Management in banks?
The primary objective of risk management in banks is to identify, measure, monitor, and control risks to ensure the bank remains solvent and profitable while meeting regulatory requirements.
What is Residual Risk in the context of bank risk management?
Risk remaining after applying controls and mitigation measures.
What are the three main categories of risk under Basel II framework?
Under Basel II, the three main categories of risk are Credit Risk, Market Risk, and Operational Risk, each requiring specific capital allocation under Pillar 1.
What is the difference between Pillar 1 and Pillar 2 capital requirements under Basel II?
Pillar 1 is minimum regulatory capital; Pillar 2 covers additional supervisory capital.
What is Value at Risk (VaR)?
Value at Risk (VaR) is a statistical measure that estimates the maximum potential loss a portfolio may face over a given time period at a specified confidence level, typically 99% over a 10-day period.
What is the Standardised Approach (SA) for calculating Credit Risk?
Uses fixed regulatory risk weights assigned by regulators to exposures.
What does the term 'Risk Appetite' signify in banking?
Risk Appetite refers to the amount and type of risk a bank is willing to accept in pursuit of its business objectives, as defined and approved by its Board of Directors.
What is the Internal Ratings-Based (IRB) approach for credit risk?
Banks use own estimates of PD, LGD, EAD to calculate capital requirements.
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