Effective Study Techniques for the PRMIA 8004 Exam

Review compensation plans to ensure consistency with corporate risk appetite, competitive market conditions, and fiduciary responsibility to shareholders

Collectively assume responsibility of understanding and reporting the effectiveness of the firm risk management infrastructure

Be composed of key business unit representatives

Leave shareholder accountability to senior management who decides strategic direction

Rogue traders

Improper or insufficient Board-level communication regarding the importance of risk management and oversight

Inadequate back office procedures

Money laundering using foreign exchange trades for political leaders

Money due to unfavourable market moves

Loss of its' reputation due to actions seen as detrimental to their clients

Loss of market share due to their licenses being revoked

Time spent on legal proceedings in courts

Stress Testing looked at the 12 biggest deals with each of their top 20 counterparties

Stress Testing was not conducted

Stress Testing was not necessary because their trades were hedged

Stress Testing was elaborate, complex and conducted on their entire portfolio. It included the assumptions of a major breakdown in historical correlations

Perform the assignment, noting in the final report the standards to which the assignment was done

Accept the assignment, produce and deliver two reports according to both standards

Accept the assignment, and prior to doing any work, report the conflict of interest to the organization's compliance department

The PRMIA member should place the integrity of the risk management profession and users of risk management above their own personal interests, and refuse the work

I only

I, III and IV only

I and III only

All of these are expected of the Risk Management Infrastructure

Maintaining appropriate assurance measures to ensure that the Governance and Risk framework of the organization is effective, and, if any shortcomings are discovered, to escalate these to the Board so that remedial action can be taken in an appropriate and timely manner

ensuring that all employees understand the rules and regulations (both internal and external) with which they must comply and the implications, for them and for the organization, of non-compliance

Ensures that reporting of risk and governance-related matters are produced in a timely and accurate manner

Acts as sponsor for risk throughout the organization and ensures that a risk culture is implemented, and maintained

Market Risk

Credit Risk

Operational Risk

Both B and C

credit risk caused by overexposure to the property market

credit risk caused by a diversified portfolio of poor-quality loans

both A and B

none of the above

Extreme exposure to foreign currency exposures and losses from non-US$ mortgages

Lawmakers postponed strenghtening regulatory oversight due to partisan infighting

Under-management and under-measurement of market and liquidity risk

They did not raise enough capital to weather the storm as the housing slump expanded