AS-05 (v) Actuarial Aspects of Risk Management Mock Test 02
This section focuses on identifying, assessing, and controlling risks within an enterprise risk management framework. It explains that risk identification is a continuous process because projects evolve over time. The chapter discusses risk categories based on probability and impact, scenario analysis, historical and synthetic scenarios, asset-liability management (ALM), and statutory reserves. It highlights the importance of evaluating financial impacts on the balance sheet, adjusting historical scenarios for current conditions, and using "what if" simulations to assess uncertainty. The chapter also emphasizes regulatory oversight, long-term risk mitigation, and effective risk control to strengthen financial stability and organizational resilience.
1. Why is risk identification described as not an exact science?
A. It should be an ongoing process throughout the project as new personnel and phases bring different viewpoints
B. It only applies to finance
C. It is never useful
D. It can be done once and finalized
E. It requires no input
2. Low Impact, High Probability risks are largely due to:
A. Radical design changes
B. Acts of God
C. Competitor actions
D. Catastrophic events
E. Uncertainties about a number of individually minor elements that in aggregate could amount to a significant risk
3. An evaluation of a scenario includes the quantification of its effects on the firm's:
A. Advertising reach
B. Brand value only
C. Marketing budget
D. Balance sheet and performance, depending on the applicable valuation standard
E. Employee count
4. When developing a historical scenario, adjustments are needed because:
A. No data exists
B. Probabilities are always known
C. The future is certain
D. Historical circumstances will inevitably be different from the current or future situation
E. Synthetic data is preferred
5. The chapter notes that the ALM policy does NOT have the objective to skip out the institution from elaborating which related policy?
A. A leave policy
B. A procurement policy
C. A liquidity policy
D. A travel policy
E. A dress code policy
6. Which risks are generally most difficult to mitigate, requiring long-term efforts by project directors?
A. High-impact, low-probability risks
B. Low-impact, high-probability risks
C. Risks with no consequences
D. Fully insured risks
E. Already-eliminated risks
7. The level of risk control was measured over discrete grades between which values?
A. Between 0 and 5
B. Between 0 and 1
C. Between minus 5 and 5
D. Between 1 and 10
E. Between 0 and 100
8. Scenario analysis addresses the issue of uncertainty associated with the future direction of interest rates by using which type of simulations?
A. Only fixed-rate models
B. Only zero-rate models
C. 'What if' simulations
D. Only historical replays
E. Only equity models
9. Starting in 2009, which organizations began evaluating how management at financial services organizations assesses and manages risk?
A. Suppliers
B. Rating agencies
C. Advertisers
D. Customers
E. Employees
10. Statutory reserves have predominantly been driven by which type of claim?
A. Marine claims
B. Travel claims
C. Health claims
D. Environmental claims
E. Auto claims
