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. Which of the following is a primary tool for managing foreign exchange risk? Options contracts Fixed deposit accounts Insurance policies Certificates of deposit None 2. The purpose of a 'Business Continuity Plan' in risk management is to: Eliminate risks completely Ensure critical business operations continue during and after a disruption Increase operational efficiency during peak seasons Avoid all forms of regulatory compliance None 3. Which of the following is a key element of the 'Three Lines of Defense' model in risk management? Risk-taking activities Independent risk oversight and assurance Maximizing returns Outsourcing risk management None 4. The term 'Credit Spread' refers to: The difference between the borrowing rate and the lending rate The difference in yield between a risk-free bond and a corporate bond The profit margin of a bank The total amount lent by a bank None 5. In the context of insurance, 'Persistency Ratio' measures: The ratio of claims to premiums The percentage of policies renewed compared to policies sold The number of new policies issued The profitability of an insurer None 6. What is the primary purpose of 'Dynamic Financial Analysis' in insurance? To calculate profitability To model an insurer’s financial position under various scenarios To identify fraudulent claims To assess marketing strategies None 7. 'Reverse Stress Testing' is a risk management tool used to: Assess profitability under normal conditions Identify scenarios that would cause the business model to fail Test operational efficiency Calculate the break-even point None 8. In banking, 'Duration' is used to measure: The interest rate sensitivity of an asset or liability The maturity period of a loan The time taken to process a transaction The default probability of a borrower None 9. 'Natural Hedging' refers to: Using derivatives to offset risks Balancing assets and liabilities in the same currency or market Eliminating all risks through insurance Outsourcing risk management functions None 10. Which of the following is NOT a type of insurance risk? Mortality Risk Lapse Risk Currency Risk Expense Risk None 11. 'Operational Risk Events' include all EXCEPT: Internal fraud External fraud Market volatility IT system failures None 12. The 'Claims Reserving' process in insurance is: Estimating the amount of future claims liabilities Calculating the premiums to be charged Denying claims for high-risk policyholders Investing the premiums in financial markets None 13. The term 'Risk Aggregation' in enterprise risk management means: Adding unrelated risks together Consolidating risks across the organization to understand overall exposure Prioritizing minor risks Outsourcing the management of risks None 14. Which of the following best defines 'Counterparty Risk'? Risk of operational errors during transactions Risk that the other party in a financial transaction may default Risk of losing customers to competitors Risk of technological failures None 15. The 'Leverage Ratio' under Basel III is a measure of: A bank's operational efficiency A bank's capital relative to its total assets, without risk weighting A bank's profitability in lending operations The market share of a bank None 16. The primary purpose of 'Insurance Endorsements' is to: Deny high-risk policies Modify the terms of an existing insurance policy Attract more customers through marketing Increase the premium charged to all customers None 17. 'Cyber Insurance' is designed to cover risks related to: Losses from currency fluctuations Financial losses due to data breaches and cyberattacks Claims for natural disasters Losses in stock market investments None 18. 'Risk Appetite Framework' in a financial institution is used to: Identify new business opportunities Define the level and types of risks an organization is willing to take Increase customer satisfaction Assess past performance None 19. Risk Retention' in risk management refers to: Transferring risk through insurance Accepting and managing risk internally Avoiding risk completely Outsourcing the risk to another party None 20. Which of the following is an example of qualitative risk assessment? Monte Carlo Simulation Scenario Planning Regression Analysis Sensitivity Analysis None 21. Compliance Risk' arises due to: Non-adherence to laws and regulations Fluctuations in interest rates Customer dissatisfaction Technological failures None 22. The term 'Insurance Penetration' refers to: The percentage of claims settled within a year The ratio of insurance premiums to the GDP of a country The number of customers purchasing insurance The market share of an insurance company None 23. 'Liquidity Coverage Ratio' (LCR) requires banks to: Maintain high-quality liquid assets to meet short-term obligations Eliminate credit risks entirely Increase profits during economic downturns None 24. 'Proportional Reinsurance' means: The reinsurer covers the total loss The reinsurer shares the premium and losses in agreed proportions The insurer retains all risks The reinsurer charges a flat fee for coverage None 25. 'Economic Capital' is primarily used to: Calculate statutory reserves Measure the capital required to cover unexpected losses Enhance profitability Predict market trends None 26. 'Risk Avoidance' in risk management refers to: Completely eliminating exposure to a specific risk Accepting risks to maximize returns Transferring risks through hedging or insurance Ignoring potential risks None 27. The 'Insurance Solvency Ratio' measures: The profitability of an insurance company The insurer's ability to meet its liabilities The number of claims settled The total premium collected None 28. The primary goal of 'Operational Risk Management' is to: Increase market share Minimize losses due to internal processes, people, or systems Eliminate credit risks Enhance customer satisfaction None 29. 'Policy Surrender' in insurance refers to: Transferring an insurance policy to another person Canceling an insurance policy before its maturity Renewing a policy at a higher premium Claiming a policy after its maturity None 30. 'Risk Culture' in an organization is defined as: The shared values and attitudes toward managing risk The tools used to mitigate risk The policies set by regulators The process of risk quantification None 31. 'Stress Testing' is conducted to: Evaluate employee performance under pressure Assess the resilience of a financial institution under adverse conditions Predict stock market trends Calculate None 32. 'Expense Ratio' in insurance measures: The ratio of operating expenses to total premium collected The ratio of claims paid to total assets The ratio of policies issued to total claims filed The ratio of customer complaints to policies sold None 33. 'Currency Risk' arises when: Currency exchange rates fluctuate adversely Government bonds are devalued A company operates only domestically Inflation rates remain stable None 34. The 'Combined Ratio' of an insurance company below 100% indicates: A loss-making position An underwriting profit A high claims ratio A market share decline None 35. 'Monte Carlo Simulation' in risk management is used for: Determining employee bonuses Simulating potential risk scenarios using random variables Testing operational systems Analyzing marketing strategies None 36. 'Loss Severity' in risk assessment measures: The likelihood of a risk event occurring The magnitude of loss when a risk event occurs The time frame of a risk event The frequency of risk events None 37. 'Risk Heat Maps' are used to: Prioritize risks based on impact and likelihood Eliminate all risks from a portfolio Increase investment returns Identify profitable business opportunities None 38. 'Lapse Risk' in insurance refers to: The risk of policyholders discontinuing their policies The risk of fraudulent claims The risk of natural disasters The risk of regulatory changes None 39. 'Key Risk Indicators' (KRIs) are designed to: Evaluate past risk events Predict and monitor potential risks Enhance profitability Measure customer satisfaction None 40. The 'Risk Premium' is: The additional return demanded by investors for taking on risk The amount charged by an insurer for a policy The cost of transferring risk through derivatives The fee paid for regulatory compliance 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 !! Your quiz time is about to finish. Few seconds left. 1 2 3 4 Time's upYou cannot switch tabs while taking this quiz!You are not allowed to switch tabs violation has been recorded.you cannot minimize full screen mode!You are not allowed to minimize full screen while taking this quiz, violation has been recorded.Access denied! To begin the quiz, please grant this quiz access to your camera.Time is Up!Time is Up!
