Financial Awareness - Risk, Stability & Emerging Finance
Which of the following best describes operational risk in banking?
Which of the following best describes operational risk in banking?
medium Q7 of 15
Step-by-Step Solution
Step 1: Define operational risk
Operational risk arises from failures in internal processes, people, systems, or external events affecting bank operations.Step 2: Analyze options
Borrower default is credit risk; stock market fluctuations are market risk; inability to meet obligations is liquidity risk. Only internal failures define operational risk.Final Answer:
Risk arising from failures in internal processes or systems → Option AQuick Check:
Operational risk = internal process or system failure ✅
Quick Trick: Look for internal failure keywords for operational risk.
Common Mistakes:
- Confusing operational risk with credit or market risks.
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