CAIIB BFME Module B & C By Ashish Sir Class 15
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 protect the bank's capital and earnings while ensuring regulatory compliance and financial stability.
What is 'Market Risk' in the context of banking and trading activities?
Risk of loss due to adverse movements in market prices.
What are the three main categories of risk faced by banks under Basel framework?
The three main categories are Credit Risk (risk of borrower default), Market Risk (risk from market price movements), and Operational Risk (risk from failed internal processes, people, systems, or external events).
What is the 'Standardised Approach' for calculating Market Risk capital under Basel?
Uses fixed regulatory risk weights for different market risk categories.
What is Value at Risk (VaR) and how is it used in banks?
VaR is a statistical measure that estimates the maximum potential loss a bank's portfolio can face over a specified time horizon at a given confidence level (e.g., 99% confidence over 10 days); it is widely used to quantify market risk.
What is 'Interest Rate Risk in the Banking Book (IRRBB)' under Basel III?
Risk of loss from interest rate changes affecting the banking book.
What does the term 'Net Interest Margin (NIM)' indicate in bank risk management?
NIM measures the difference between interest income earned and interest paid relative to interest-earning assets; a falling NIM indicates rising interest rate risk or inefficient asset-liability management.
What is 'Capital Conservation Buffer (CCB)' introduced under Basel III?
Additional 2.5% CET1 capital buffer above minimum requirement.
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