Banking Awareness - Banking Acts, Reforms & Risk Management
Provisioning by banks is primarily a part of which aspect of risk management?
Provisioning by banks is primarily a part of which aspect of risk management?
medium Q14 of 15
Step-by-Step Solution
Step 1: Recall what provisioning means
Provisioning sets aside funds to cover potential losses.Step 2: Link provisioning with risk framework
It reduces the impact of losses and hence mitigates risk.Final Answer:
Risk control and mitigation → Option CQuick Check:
Provisioning cushions losses, so it mitigates risk ✅
Quick Trick: Setting aside funds = risk mitigation.
Common Mistakes:
MISTAKES- Classifying provisioning as only monitoring activity.
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