CAIIB RISK MNG LIVE Class 1 By Ashish Sir
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Risk Management (Elective) — 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 banking as per RBI guidelines?
The primary objective is to identify, measure, monitor, and control risks to protect the bank's capital and earnings while enabling it to take informed business decisions.
What is the difference between risk management and risk avoidance in banking?
Risk management mitigates risk; avoidance eliminates risk-taking entirely.
Which three pillars form the foundation of the Basel II framework?
The three pillars are Minimum Capital Requirements (Pillar 1), Supervisory Review Process (Pillar 2), and Market Discipline through disclosure (Pillar 3).
What is Residual Risk in the context of bank risk management?
Risk remaining after controls and mitigants have been applied.
What is the difference between expected loss and unexpected loss in credit risk?
Expected Loss (EL) is the average loss anticipated over a period and is covered by loan loss provisions, while Unexpected Loss (UL) is the deviation from EL and must be covered by economic capital.
What is the purpose of a Risk Register in operational risk management?
It documents identified risks, controls, owners, and mitigation plans.
How is Credit Risk defined in the context of banking operations?
Credit risk is the risk of loss arising from a borrower's failure to repay a loan or meet contractual obligations, including both default risk and downgrade risk.
What does RAROC stand for and what does it measure?
Risk-Adjusted Return on Capital; measures profitability relative to risk taken.
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