Banking · Operational Risk
In the context of the Basel framework for banking supervision, operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events. Which of the following is explicitly included in this definition?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Reputational risk arising from negative public perception and loss of franchise value.
- 2Market risk arising from fluctuations in foreign exchange rates and interest rate movements.
- 3Legal risk, including exposure to fines, penalties, or punitive damages resulting from regulatory actions.✓
- 4Strategic risk resulting from adverse business decisions or poor implementation of business strategies.
Correct answer
Legal risk, including exposure to fines, penalties, or punitive damages resulting from regulatory actions.
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