CAIIB BFME Module B & CBy Ashish Sir Class 13
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 of risk management in banks is to identify, measure, monitor, and control risks to protect the bank's capital and earnings while ensuring sustainable profitability.
What is credit risk and how does it affect banks?
Risk of borrower defaulting on loan repayment obligations
What are the three pillars of Basel II framework?
The three pillars of Basel II are Minimum Capital Requirements (Pillar 1), Supervisory Review Process (Pillar 2), and Market Discipline through disclosure (Pillar 3).
What is the Basel III minimum Common Equity Tier 1 (CET1) ratio requirement?
4.5% of risk-weighted assets globally
What does the term 'risk appetite' mean in the context of bank risk management?
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 the Board of Directors.
What is the Capital Conservation Buffer under Basel III?
Additional 2.5% CET1 above minimum requirement
What is the difference between expected loss and unexpected loss in credit risk?
Expected loss is the average loss a bank anticipates over a given period and is covered by loan loss provisions, while unexpected loss represents extreme deviations beyond expected loss and must be covered by capital.
What is Countercyclical Capital Buffer (CCyB) in Basel III?
Up to 2.5% buffer activated during credit booms
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