CAIIB BFME Module B & C By Ashish Sir Class 6
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 a bank?
The primary objective is to identify, measure, monitor, and control risks to ensure the bank's solvency, profitability, and regulatory compliance while optimizing risk-return trade-offs.
What is the Exposure at Default (EAD) in credit risk measurement?
Outstanding amount a borrower owes at time of default.
What does ICAAP stand for in the context of Basel II/III?
ICAAP stands for Internal Capital Adequacy Assessment Process, which requires banks to assess all material risks and maintain adequate capital beyond minimum regulatory requirements.
What is the difference between Pillar 1 and Pillar 2 capital requirements under Basel?
Pillar 1 is minimum regulatory capital; Pillar 2 is supervisory review capital.
What is the difference between expected loss and unexpected loss in credit risk?
Expected loss is the average loss anticipated over a given period and is typically covered by loan loss provisions, whereas unexpected loss represents volatility around the expected loss and must be covered by capital.
What is Repricing Risk in the context of interest rate risk?
Risk from timing differences in maturity or repricing of assets and liabilities.
What is Value at Risk (VaR)?
VaR is a statistical measure that estimates the maximum potential loss on a portfolio over a specified time horizon at a given confidence level, such as 99% confidence over a 10-day period.
What is the Basic Indicator Approach (BIA) for operational risk capital?
Capital charge equals 15% of average annual gross income over three years.
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