The ABC Bank Ltd. is a bank in India and has a credit arrangement of Rs. 10 billion. The key portfolio highlights are given beneath:

The biggest area openness is in development which represented 20% of the credit portfolio (others areas in the portfolio incorporate concrete/steel producers, building material wholesalers, land designers/developers, car makers, tire makers and speculation banks).

The two biggest clients represent 30% (they have a place with the development and building materials area). All obligors in the credit portfolio are arranged inside India. The credit items offered by the bank incorporate both short and long haul - however the larger part is long haul surpassing one year, representing 60% of the portfolio. A large portion of the subsidizing sources are present moment - for example transient stores and between bank borrowings, which represented about 75% of the complete financing prerequisites. Albeit whole loaning was in Rupees, 45% of the momentary stores were in non-rupee monetary forms. The solitary insurance it acknowledges is land.

Talk about the portfolio level dangers in this portfolio. Is there any critical undiversified danger in this credit portfolio? Provided that this is true, recommend how further enhancement can be accomplished.

Multiple Choice Questions

A ........... is the threat that an event or action will adversely affect an enterprise's ability to

maximize stakeholder value and to achieve its business objectives.

• Enterprise Risk
• Business Risk
• Operational Risk
• Financial Risk

......... defines financial risk as the risk that the cash flow of an issuer will not be adequate to meet

its financial obligations.

• Basel II
• Institute of Risk Management
• NASDAQ
• NYSE

........ is the process of evaluating and defining the cost and benefits associated with the risk

consequences.

• Risk Quantification
• Risk Assessment
• Risk Measurement
• None of the above

Which among the following is not one of the Risk Management techniques?

• Tolerate
• Transfer
• Terminate
• Tackle

......... measures the strength of linear relationship between two random variables.

• Covariance
• Coefficient of Correlation
• Standard Deviation
• Mean Deviation

......... draws a sample from the dataset and records its VaR.

• Historical Simulation
• Bootstrap Simulation
• Monte Carlo Simulation
• None of the above

The excess return of a fund relative to the return of a benchmark index is the fund's ..........

• Alpha
• Beta
• Sharpe Ratio
• R Squarred

Which among the following is not a governance risk?

• The rights of shareholders and key ownership functions are not defined and communicated.
• Disclosure and transparency norms are not articulated
• Unauthorized related party transactions
• Board has defined risk capacity, appetite and risk response strategies

Which among the following are the characteristics of Risk Defined?

• Risks identified within functions and not across processes. Also risks not communicated across enterprise.
• Strategy and policy in place and communicated
• Enterprise wide approach to risk management developed and communicated
• Risk management and internal control fully embedded into operations

For banks, it is mandatory tohave a/an policy approved by the Board.

• Operational Risk
• Enterprise Risk
• Financial Risk
• Strategic Risk