Question

Which of the following is/are correct about the "Operational Risk" as used in the field of banking?
A. Risk of loss due to inadequate or failed internal process
B. Risk of loss due to natural calamities
C. Loss occurred due to non-compliance of legal procedures

• A. Only (A)
• B. Only (B)
• C. Only (C)
• D. All (A), (B) and (C)

Answer 1

The correct option is A Only (A)

Operational risk is the risk not inherent in financial market, systematic or market- wide risk. It is basically the risk determined after financial and systematic risk. It includes the risk which results due to breakdown in internal procedures, people and systems. Hence, in the field of banking, risk of loss due to inadequate or failed internal process is called as operational risk.