Banking · Operational Risk in Banking
In the context of banking risk management, 'Operational Risk' is categorized as a specific threat because it stems from the internal functioning of the organization rather than external market movements. Which of the following situations best represents an operational risk event?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1An increase in the cost of funds due to a sudden hike in the cash reserve ratio by the central bank.
- 2A reduction in the market value of the bank's equity portfolio due to stock market volatility.
- 3A decline in the credit rating of a major corporate borrower leading to higher provisioning.
- 4A financial loss resulting from a failure in the bank's internal processing systems or human error.✓
Correct answer
A financial loss resulting from a failure in the bank's internal processing systems or human error.
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