The risk that an FI may not have enough capital to offset a sudden decline in the value of its assets is called operational risk.

Question

Quizplus · Accepted Answer

The risk that an FI may not have enough capital to offset a sudden decline in the value of its assets is actually called market risk or credit risk, depending on the nature of the assets. Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems, or external events.

The Risk That an FI May Not Have Enough Capital