Operational Risk Management Flashcards
6 cards from real APRP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Operational Risk Management flashcards as text
What is 'change management risk' in the context of payment systems?
Answer: Risk that system changes introduce errors, outages, or vulnerabilities if not properly controlled
Change management risk is the possibility that modifications to payment systems or processes introduce new failures, errors, or security vulnerabilities without proper testing and approval.
Which of the following is the best example of a preventive control in payment operational risk?
Answer: Requiring dual approval before processing large-value wire transfers
Requiring dual approval before processing large-value transfers is a preventive control because it stops potential errors or fraud before they occur.
A payment company's call center receives an unusually high volume of customer complaints about declined transactions over a 30-minute window. From an operational risk standpoint, what should be the immediate priority?
Answer: Activate the incident response procedure to investigate and restore service
An unusual spike in declined transactions is a potential system or fraud incident trigger, making immediate activation of the incident response procedure the correct first step.
In payment risk management, what is a 'fat finger' error?
Answer: A human data entry mistake resulting in an incorrect transaction amount or routing
A 'fat finger' error refers to a human keying mistake, such as entering the wrong amount or account number, which can result in significant operational losses in payments.
Which of the following operational risk tools helps quantify the frequency and severity of potential payment loss events using statistical distributions?
Answer: Loss Distribution Approach (LDA)
The Loss Distribution Approach (LDA) uses historical loss data fitted to statistical distributions to model the frequency and severity of operational risk events for capital and risk quantification.
Why is staff training considered a critical operational risk control in payment organizations?
Answer: It minimizes human error and ensures staff can identify and respond to risk events appropriately
Trained staff are less likely to make errors and more capable of identifying and escalating risk events, making training a foundational preventive and detective control.