Which of the following statements is true?
A)Operational risk is not considered to be important in FI's and thus regulatory authorities assume that it is captured by an FI's general risk management framework.
B)Operational risk is considered to be important and thus the Basel Committee requires FI's to provision against their operational risk exposures.
C)Operational risk is considered to be important and thus the Basel Committee requires FI's to allocate capital against their operational risk exposures.
D)Operational risk is considered to be important; however, regulators are aware that FI's have well-functioning operational risk defence mechanisms in place.

Question

Quizplus · Accepted Answer

The Basel Committee considers operational risk to be important and requires financial institutions to allocate capital against their operational risk exposures. Option A is incorrect as operational risk is considered important, while option B is incorrect as FI's are required to allocate capital rather than provision against operational risk exposures. Option D is incorrect as regulators do not assume that FI's have well-functioning operational risk defence mechanisms in place, and therefore require them to allocate capital.

Which of the Following Statements Is True