CH16-Risk Management Flashcards Preview

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Flashcards in CH16-Risk Management Deck (6)
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1
Q

4 factors company leadership should address to manage risk

A
  1. culture
  2. internal controls
  3. technology
  4. guidelines from BOD
2
Q

4 things that help prevent managerial malfeasance

A
  1. educated risk taking atmosphere
  2. individual responsibility culture
  3. admit information gaps
  4. independent BOD
3
Q

Operational risk is defined as

A

the risk of direct and indirect losses resulting either from external events that impact an organization’s operations, or inadequate and failed internal processes, people and systems.

4
Q

What is it called when treasury professionals work together with others in the organization to manage not only financial risk as a component of market risk, but also credit and liquidity risks, operational risks, legal and regulatory compliance risks, and business, strategic and reputation risks?

A

Enterprise risk management (ERM)

5
Q

Define Reputation Risk

A

risk that customers, suppliers, investors, regulators decide you have a bad reputation and don’t want to do business with you. Especially important for FIs

-also relates to how companies react to unexpected events

6
Q

VaR (5%) =

A

VaR (5%) = Portfolio Value * 1.65 * Standard Deviation