8010 Exam Dumps | Which of the following will be a loss not covered by operational risk as defined under Basel II?

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PRMIA.8010.v2022-06-27.q87
Question 27

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Question 27/87

Which of the following will be a loss not covered by operational risk as defined under Basel II?

A. Earthquakes

B. Fat finger losses

C. Systems failure

D. Strategic planning

Correct Answer: D

Explanation
Operational risk isdefined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk.
Therefore any losses from poor strategic planning will not be a part of operational risk. Choice 'd' is the correct answer.
Note that floods, earthquakes and the like are covered under the definition of operational risk as losses arising from loss or damage to physical assets from natural disaster orother events.

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