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 NOT a type of risk commonly faced by banks? Credit Risk Market Risk Operational Risk Mortality Risk None 2. Basel III norms primarily focus on which aspect of banking regulation? Enhancing bank profitability Strengthening bank capital requirements and liquidity Promoting digital banking Encouraging mergers and acquisitions None 3. In the context of insurance, 'Underwriting' refers to: The process of settling claims The process of assessing and accepting risk The process of marketing insurance products The process of investing premium funds None 4. What does 'Credit Risk' in banking refer to? Risk of loss due to changes in interest rates Risk of loss due to a borrower's failure to make payments Risk of loss due to operational failures Risk of loss due to natural disasters None 5. The technique of 'Hedging' is used to: Maximize profits by taking additional risks Minimize risk exposure by taking offsetting positions Increase market share through advertising Reduce operational costs None 6. Which one of the following is an example of 'Market Risk'? A borrower defaults on a loan repayment An employee fraud causes financial loss Interest rates rise unexpectedly, affecting bond prices A data breach leads to loss of customer information None 7. 'Solvency II' is a regulatory framework associated with which industry? Banking Insurance Securities Real Estate None 8. Which of the following is an internal method for measuring credit risk? Standardized Approach Internal Ratings-Based Approach Advanced Measurement Approach Monte Carlo Simulation None 9. The 'Liquidity Coverage Ratio' (LCR) is designed to ensure that banks: Have enough high-quality liquid assets to survive a 30-day stress scenario Maintain a certain level of profitability Expand their lending activities Increase their market share None 10. Which of the following risks is mainly associated with failures in internal processes, people, and systems? Credit Risk Market Risk Operational Risk Liquidity Risk None 11. 'Reinsurance' in the insurance industry is: Insuring a policyholder more than once Insuring the insurer against large claims Cancelling an insurance policy Offering insurance at discounted rates None 12. The primary goal of 'Asset Liability Management' (ALM) in banking is to: Maximize profits through aggressive lending Match the maturities and interest rates of assets and liabilities to manage risk Increase the bank's market share Reduce operational expenses None 13. What is 'Stress Testing' in risk management? Assessing employees under pressure Evaluating the resilience of financial institutions under extreme conditions Testing new software systems Measuring customer satisfaction None 14. In the context of Basel Accords, 'Tier 1 Capital' refers to: Debt instruments held by the bank The bank's core capital, including equity and disclosed reserves Customer deposits Investment securities None 15. Which of the following is NOT a derivative instrument used for risk management? Futures Options Swaps Equity Shares None 16. 'Risk Appetite' is best described as: The amount of risk an organization is willing to accept in pursuit of its objectives The amount of risk an organization is required to accept by regulators The total risk faced by an organization The process of identifying potential risks None 17. In insurance, 'Moral Hazard' refers to: The risk that the insured party behaves differently because they have insurance The risk associated with natural disasters The process of estimating potential losses The ethical considerations in underwriting None 18. 'Risk Mitigation' strategies include all EXCEPT: Risk Avoidance Risk Transfer Risk Acceptance Risk Creation None 19. 'Economic Capital' is: The statutory capital required by regulators The amount of capital that a bank estimates is necessary to cover all its risks C) The capital invested by shareholders The capital used for daily operations None 20. 'Value at Risk' (VaR) is a technique used to: Predict future profits Measure the maximum potential loss over a specific time frame at a given confidence level Assess creditworthiness of borrowers Determine operational efficiency None 21. In the context of risk management, 'Diversification' refers to: Focusing investments in a single asset class Spreading investments across various assets to reduce risk Eliminating all risks from a portfolio Investing solely in government securities None 22. Which of the following is an example of 'Systemic Risk'? A single bank fails due to fraud A widespread banking crisis affecting the entire financial system A borrower defaults on a loan An insurance claim is denied None 23. 'Capital Adequacy Ratio' (CAR) is a measure of: The profitability of a bank The bank's liquidity position The bank's capital relative to its risk-weighted assets The efficiency of bank's operations None 24. The 'Insurance Regulatory and Development Authority of India' (IRDAI) is responsible for: Setting monetary policy Regulating and promoting the insurance industry in India Managing the stock exchanges Overseeing the banking sector None 25. 'Interest Rate Risk' arises from: Changes in currency exchange rates Variations in market interest rates affecting asset and liability values Credit defaults by borrowers Operational inefficiencies None 26. 'Duration Gap Analysis' is a tool used to manage: Credit Risk Liquidity Risk Interest Rate Risk Operational Risk None 27. Which of the following is a qualitative method of risk assessment? Scenario Analysis Statistical Modeling Regression Analysis Monte Carlo Simulation None 28. In the context of insurance, 'Actuarial Science' is primarily concerned with: Marketing strategies Legal compliance Quantifying risk and calculating premiums Customer relationship management None 29. 'Operational Risk' includes all EXCEPT: Internal fraud External fraud Market fluctuations System failures None 30. The purpose of 'Know Your Customer' (KYC) norms is to: Enhance customer service Increase sales of financial products Prevent money laundering and financial fraud Improve operational efficiency None 31. 'Counterparty Risk' is the risk that: One party in a transaction will default on contractual obligations Market prices will move adversely Operational systems will fail Regulations will change unexpectedly None 32. 'Basel II' introduced which of the following pillars? Minimum Capital Requirements, Supervisory Review, Market Discipline Liquidity Requirements, Risk Governance, Stress Testing Profitability Measures, Customer Satisfaction, Market Share Capital Conservation, Countercyclical Buffer, Leverage Ratio None 33. 'Anti-Money Laundering' (AML) measures are important in risk management because they: Increase bank profits Ensure compliance with legal and regulatory requirements Enhance customer satisfaction Reduce operational costs None 34. The 'Insurance Penetration Rate' refers to: The ratio of total insurance premiums to the GDP of a country The number of insurance policies sold in a year The market share of an insurance company The percentage of claims settled within a time frame None 35. 'Gap Analysis' in Asset Liability Management helps in identifying: Profitability of products Mismatches between assets and liabilities over different time horizons Customer needs Regulatory compliance issues None 36. The 'Risk-Weighted Assets' (RWA) concept is used to: Measure the total assets of a bank Determine the required capital by adjusting assets for risk Evaluate operational efficiency Calculate customer deposits None 37. In risk management, 'Probability of Default' (PD) is used to assess: The likelihood that a borrower will fail to meet obligations The amount of loss if a default occurs The exposure at default The recovery rate after default None 38. 'Loss Given Default' (LGD) refers to: The total amount owed by a defaulted borrower The percentage of an exposure that is lost if a default occurs The probability that a borrower will default The time period until default occurs None 39. 'Enterprise Risk Management' (ERM) is: Managing only financial risks A holistic approach to managing all risks across an organization Outsourcing risk management functions Focusing on compliance risks only None 40. The main objective of 'Capital Conservation Buffer' under Basel III is to: Enhance bank profits during economic booms Require banks to build up capital buffers outside periods of stress Provide guidelines for liquidity management Standardize operational procedures 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. 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