RSK2602 Assignment 1 Semester 1 | Due 20 March 2025

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RSK2602 Assignment 1 Semester 1 | Due 20 March 2025. All questions answered. Evaluate the accuracy of each of the following statements. Indicate whether you consider the statement accurate (true) or not (false) and provide a full motivation for your answer. 2.1 Operational risk is speculative in nature. 2.2 Where a bank is unable to meet unexpected demands for cash, it means that the bank is illiquid and insolvent. 2.3 The three pillars of operational risk management and corporate governance in terms of the new Basel Accord are regulation, supervision and control. 2.4 Speculators in the financial markets normally have an indifferent attitude towards risk. 2.5 In terms of good corporate governance, the risk committee should be responsible for determining the levels of risk tolerance for the organisation. 2.6 Operational risk management drivers include internal, external and regulatory drivers. 2.7 The investment in preventative controls can be considered as an upside of operational risk. 2.8 A hybrid approach to risk measurement is the preferred approach and provides a more realistic reflection of reality. 2.9 The actual management of operational risk should be performed by means of a bottom-up approach. 2.10 There is no upside to operational risk. Question 2 Identify and discuss the four primary operational risk factors that business organisations face. In your answer, define each primary risk factor and explain its main drivers or components. Use examples to illustrate your answer.