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For the Barings case study, what external event may have accelerated the discovery of the loss event?
Correct Answer: D
Background of the Barings Case Study The Barings Bank collapse occurred due to unauthorized derivatives trading by Nick Leeson in Singapore. Leeson concealed losses, and his trading positions became unmanageable. How the Kobe Earthquake Affected Barings On January 17, 1995, the Kobe earthquake caused extreme market volatility. Leeson's unauthorized trades were highly exposed to the Nikkei 225 index, and the earthquake triggered heavy losses. The event accelerated the exposure of Leeson's fraudulent activities, leading to Barings' collapse. Why Answer D is Correct The Kobe earthquake created market turmoil, forcing Barings to confront its financial position, ultimately revealing the hidden losses. Why Other Answers Are Incorrect Option Explanation: A . The collapse of Lehman Brothers into bankruptcy in 2002. Incorrect - Lehman Brothers collapsed in 2008, not 2002. B . The Singapore earthquake of January 17th, 1995. Incorrect - No significant earthquake occurred in Singapore on that date. C . The collapse of Lehman Brothers into bankruptcy in 2008. Incorrect - Barings collapsed in 1995, not related to Lehman Brothers' 2008 failure. PRMIA Reference for Verification PRMIA Case Study on Barings Bank Collapse Basel Committee Principles on Risk Oversight and Fraud Prevention
