FRM 2026 Part I Foundations of Risk Management Operational Risk Free Quiz 2

Practice FRM 2026 Part I Foundations of Risk Management MCQs from Operational Risk. Get instant results with Explanation.

General10 MCQs

1. What is scenario analysis in operational risk?

A. Scenario analysis helps assess the impact of hypothetical events in operational riskB. Scenario analysis is the same as stress testingC. Scenario analysis is not used in operational riskD. Scenario analysis is only for market risk

2. What are the three approaches for operational risk capital under Basel?

A. There is only one approach for operational risk capitalB. The Basic Indicator Approach uses internal modelsC. The Standardised Approach uses only external dataD. The Basel framework has three approaches: BIA, SA, and AMA

3. What is the Basic Indicator Approach (BIA)?

A. BIA uses internal loss dataB. BIA calculates capital as a percentage of gross incomeC. BIA is the most advanced approachD. BIA is not part of the Basel framework

4. What is the Standardised Approach (SA) for operational risk?

A. SA uses the same factor for all business linesB. SA is the simplest approach for operational riskC. SA uses business line-specific factors applied to gross incomeD. SA is not used in practice

5. What is the Advanced Measurement Approach (AMA)?

A. AMA uses internal models to calculate operational risk capitalB. AMA is the simplest approachC. AMA does not require internal dataD. AMA is not allowed under the Basel framework

General10 MCQs

6. What is the loss distribution approach (LDA) in operational risk?

A. Operational risk models use only severity distributionsB. Operational risk models use only frequency distributionsC. Operational risk models are not used in practiceD. Operational risk models use the loss distribution approach (LDA)

7. What is the capital requirement for operational risk?

A. Operational risk capital is not requiredB. Operational risk capital is required to cover unexpected lossesC. Operational risk capital is the same as market risk capitalD. Operational risk capital is based on the total assets

8. How should operational risk management be integrated?

A. Operational risk management is separate from other risk managementB. Operational risk management does not need to be integratedC. Operational risk management should be integrated with the overall risk management frameworkD. Operational risk management is only for large banks

9. Why should the operational risk function be independent?

A. Operational risk function should be independent to provide objective oversightB. Operational risk function should be part of the business linesC. Independence is not important for operational riskD. Operational risk function is always part of the finance department

10. Who is responsible for overseeing operational risk management?

A. The board is not involved in operational risk managementB. Senior management has no role in operational riskC. Operational risk is solely the responsibility of the operational risk managerD. The board and senior management oversee operational risk management

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