Which of the following is/are correct about the Operational Risk as used in the field of banking?begin{enumerate}item Risk of loss due to inadequate or failed internal process.item Risk of loss due to natural calamities.item Loss occurred due to non compliance of legal procedures.end{enumerate}

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which of the following is/are correct about the ‘Operational Risk’ as used in the field of banking?

A	Only 1
B	Only 2
C	Only 3
D	All the above

Explanation:

Detailed explanation-1: -There are five categories of operational risk: people risk, process risk, systems risk, external events risk, and legal and compliance risk.

Detailed explanation-2: -The standard Basel Committee on Banking Supervision definition of operational (or nonfinancial) risk is “the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events.

Detailed explanation-3: -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.

Detailed explanation-4: -Natural disasters, terrorism and vandalism. Business disruption and systems failures. Utility disruptions, software failures and hardware failures. Execution, delivery and process management.

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