Free ORM Certificate – 2023 Update Exam 8020 Exam Practice Test

In operational resilience, what is impact tolerance?

• Impact tolerance is a firm's tolerance for disruption to a particular business process.
• Impact tolerance is a firm's tolerance for disruption to a particular business service.
• Impact tolerance is a firm's risk appetite statement.
• Impact tolerance is a firm's risk capacity statement.

The DORA act's full name is which of the following?

• Domain for Operational Risk Act.
• Digital Operational Risk Act.
• Daily Operational Resilience Act.
• Digital Operational Resilience Act.

For the Barings case study, segregation of duties was an issue. How did this present itself in this case?

• A trader was responsible for managing the back-office.
• A trader was responsible for managing the front-office.
• A risk manager was responsible for managing the back-office
• A trader was responsible for managing the expense account.

For the WorldCom case, what was one of the causes of the failure?

• Risk models that did not reflect loosened underwriting standards of mortgage originators.
• The lack of a CRO during the final IPO.
• A rapid pace of acquisitions and poor integration of acquired companies.
• Unauthorized trading in derivatives.

Risk Capacity for a bank is defined as the:

• Amount of risk the bank wishes to take.
• Amount of risk the regulator sets for the bank.
• Ability to withstand an extreme event and make a profit.
• Ability to suffer an extreme event with an orderly wind up with only shareholders losing money.

For the FTX case study, what was the "backdoor" used for?

• It allowed a stable coin to be removed from the ledger and added to the balance sheet.
• It allowed trading firm Alameda to borrow S65 billion of clients' money from the exchange without their permission.
• It allowed currency traders to smooth profits and conceal losses for over two years.
• It allowed a rapid pace of acquisitions but poor integration of acquired companies.

Incorrect – ILD is historical, whereas scenario data is used for predictive analysis.Which of the following best describes the role of the compliance department?

• The compliance department is responsible for implementing the first line's compliance risk management controls.
• The compliance department is responsible for providing oversight over the auditor's implementation of compliance risk management controls.
• The compliance department is responsible for providing oversight over the board's implementation of compliance risk management controls.
• The compliance department is responsible for providing oversight over the first line's implementation of compliance risk management controls.

Which of the following is not an action available to management and the governing body to align the strategy with Risk Capacity.

• Reduce scale of risks - shrink balance sheet or activity levels.
• Improve quality of risks - pursue lower rewarding risks with better prospects.
• Reduce retained earning - by increasing dividends in order to return funds to investors and improve reputation.
• Improve retained earnings - by increasing net income or reducing dividends in order to increase risk capacity.

Which of the follow is not included in PRMIA's 10 principles of good governance?

• Risk appetite.
• Holding the PRM Designation.
• External validation.
• Clear accountability.

misjudging actual control reliability.Incorrect – This would render the control rating scale useless.Which of the following are the most relevant ways a firm can ensure they are in line with consumer protection?

• Engage with consumers once there are enough complaints.
• Add a consumer protection section to all reports.
• Treat customers fairly, place customer interests ahead of its own and keep promises to customers
• This risk cannot be managed.