Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Risk Management in Banking and InsuranceTotal Number of Question: 40Time: 41 MinutesPlease check your email after completion of test for result.All the best... Name Phone No Email State 1. The primary purpose of 'Insurance Risk Pooling' is to: Maximize profits for the insurance company Spread risk across multiple policyholders Reduce the premium amounts for all customers Eliminate all forms of risk None 2. The 'Net Stable Funding Ratio' (NSFR) under Basel III ensures that: Banks maintain adequate short-term liquidity Banks have stable funding for longer-term assets Banks increase their leverage Banks reduce their operational risks None 3. Which of the following best describes 'Insurance Fraud'? Errors made during policy issuance Intentional misrepresentation or deception by policyholders Delayed processing of claims Poor customer service None 4. Which of the following instruments is commonly used to hedge currency risk? Credit Default Swaps Currency Futures Interest Rate Swaps Equity Options None 5. The term 'Black Swan Event' in risk management refers to: Predictable events with low impact Highly improbable events with extreme impact Commonly occurring minor risks Insurable natural disasters None 6. The primary goal of 'Regulatory Risk Management' is to: Maximize profits Ensure compliance with laws and regulations Improve employee performance Enhance customer satisfaction None 7. The term 'Exposure at Default' (EAD) in credit risk management refers to: The total amount owed by a borrower The amount expected to be outstanding at the time of default The likelihood of a borrower defaulting The loss incurred after default None 8. 'Claims Ratio' in insurance is calculated as: Total premiums collected ÷ Total claims paid Total claims paid ÷ Total premiums collected Total operating costs ÷ Total claims paid Total claims filed ÷ Total policies issued None 9. What is the primary focus of 'Market Discipline' under Basel Accords? Transparency and disclosure requirements for financial institutions Increasing profitability Strengthening operational efficiency Enhancing customer relations None 10. In insurance, 'Adverse Selection' occurs when: Insurers offer policies at very high premiums High-risk individuals are more likely to purchase insurance than low-risk individuals Insurers deny claims without valid reasons Low-risk individuals dominate the insurance pool None 11. Which of the following is NOT a component of the CAMELS rating system in banking? Capital Adequacy Asset Quality Market Share Earnings None 12. A primary feature of 'Microinsurance' is: s Providing coverage to high-income groups Offering insurance products tailored for low-income individuals Focus on urban areas asset Offering coverage exclusively for large asset None 13. 'Risk Transfer' in risk management is achieved through: Insurance and derivatives Increasing capital reserves Investing in riskier assets Outsourcing operations None 14. Capital Risk' in banking refers to: Risk of insufficient capital to absorb losses Risk of losing customer deposits Risk of market interest rate changes Risk of fraud in operations None 15. In the insurance industry, 'Premium Loading' refers to: The additional amount added to the pure premium to cover expenses and profit The process of refunding excess premium Offering discounts to attract new customers The process of setting premiums below cost None 16. 'Liquidity Risk' can be best described as: The risk of not being able to meet short-term financial obligations The risk of losing customers to competitors The risk of operational failures The risk of regulatory penalties None 17. The 'Combined Ratio' in insurance is a measure of: Profitability of investment activities Overall underwriting profitability, including claims and expenses Operational efficiency Market share growth None 18. The purpose of 'Risk Register' in risk management is to: Record all identified risks and track their management List the financial assets of an organization Track operational expenses Maintain customer data None 19. Which of the following is a method of managing operational risk? Diversification Implementation of robust internal controls Hedging with derivatives Increasing market share None 20. 'Probability Impact Matrix' is used in risk management to: Prioritize risks based on their likelihood and impact Eliminate all risks from a project Quantify financial losses only Evaluate past risk events None 21. 'Reputational Risk' arises due to: Financial mismanagement Negative public perception or damage to brand image Operational system failures Regulatory changes None 22. Which one of the following risks is typically hedged using interest rate swaps? Credit Risk Market Risk Interest Rate Risk Reputational Risk None 23. The 'Key Risk Indicator' (KRI) is: A metric used to predict potential risk events A tool for auditing compliance A measure of profitability A strategy for reducing operational costs None 24. The term 'Actuarial Valuation' in insurance refers to: Estimating future claims liabilities Calculating the exact profit of an insurer Measuring customer satisfaction Assessing employee performance None 25. 'Risk Aggregation' in risk management is: Breaking risks into smaller components Consolidating various types of risks to understand total exposure Eliminating redundant risks Prioritizing low-impact risks None 26. 'Systemic Risk' in financial systems is characterized by: The collapse of a single institution without wider consequences The potential for failure of interconnected entities affecting the entire financial system Risks limited to a single country Risks arising only in developed economies None 27. 'Data Breach' in operational risk management refers to: Delayed system upgrades Unauthorized access to sensitive information Changes in regulatory policies Malfunctioning of trading platforms None 28. Which of the following is a key principle of risk management? Avoid all risks Identify, assess, and mitigate risks Take maximum risks for higher returns Delegate risk management to external parties None 29. Cyber Risk' in the banking and insurance sector refers to: Risk of IT equipment failure Risk of financial losses due to cyberattacks and data breaches Risk of losing customers to online competitors Risk of investing in technology stocks None 30. Which of the following tools is used to assess operational risks? Monte Carlo Simulation Root Cause Analysis Black-Scholes Model Yield Curve Analysis None 31. Financial Inclusion' in risk management is aimed at: Reducing operational costs for banks Expanding financial services to underserved populations Increasing profit margins for insurers Strengthening regulatory frameworks None 32. What is the purpose of a 'Contingency Plan' in risk management? To increase profitability during crises To provide a pre-defined action plan to manage unexpected risks To identify new market opportunities To eliminate regulatory requirements None 33. 'Scenario Analysis' in risk management is used to: Analyze past financial performance Evaluate the impact of hypothetical adverse situations Test software systems Reduce customer complaints None 34. Countercyclical Buffer' under Basel III is intended to: Promote lending during economic downturns Reduce lending during economic booms to avoid overheating Increase profitability during recessions Eliminate market risks None 35. 'Moral Hazard' in the insurance context is mitigated by: Raising premiums Implementing deductibles and co-payments Offering discounts on premiums Reducing coverage for all policyholders None 36. The purpose of 'Operational Resilience' is to: Increase bank profits Ensure the ability to withstand and recover from disruptions Enhance customer satisfaction Promote market expansion None 37. 'Sovereign Risk' is the risk associated with: Lending to individuals with poor credit histories Government defaults or adverse changes in government policies Exchange rate fluctuations Interest rate volatility None 38. 'Risk Appetite Statement' in an organization defines: The detailed steps for mitigating risks The organization’s approach to identifying and managing risks The level of risk the organization is willing to take to achieve objectives The impact of all identified risks None 39. In the context of credit risk, 'Collateral' serves as: A way to increase loan amounts A guarantee to reduce the lender’s risk A regulatory requirement for banks A tool for risk diversification None 40. Which of the following is an example of 'Quantitative Risk Assessment'? Risk Heat Maps Monte Carlo Simulation Brainstorming Sessions SWOT Analysis None 1 out of 4 Great job on taking the INCOC Test! We appreciate your interest in test.Look out for results and future opportunities.Stay Connected !! 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