The Basel Committee defines operational risk as the risk of loss resulting from:
A)changes in interest rates.
B)changes in inflation.
C)inadequate internal processes.
D)excessive default risk.
E)inadequate capital.

Question

Quizplus · Accepted Answer

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events. Option A and B refer to interest rate risk and inflation risk respectively, which are not covered under operational risk. Option D refers to credit risk, not operational risk. Option E refers to capital risk, which may be related to operational risk but is not a direct definition.

The Basel Committee Defines Operational Risk as the Risk of Loss