8009 Exam IV: Case Studies: Standards: Governance. Best Practices and Ethics - 2015 Edition Question and Answers

Vote in Board elections

Attend at least one PRMIA chapter meeting per year

Adhere to the PRMIA Standards of Best Practice, Conduct and Ethics

All of the above

knowledge, skills, expertise

experience, skills, previous successes

risk appetite, knowledge, expertise

track record, expertise, skills

I, II and III only

I, III and IV only

I, II and IV only

All of these are expectations of the Organization as a Whole

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

Internal controls of the organization, and the local regulator

Internal controls, and the expectations of stakeholders, shareholders, and the general public

The local regulator, internal controls, and shareholders

Only the internal controls and compliance standards

Had a risk management infrastructure that was credited with doing its' job well, despite the losses

Was not dealing in derivatives

Had a Board of Directors that was unaware of the true nature of trading activities

Had a separation of duties between trading and back office

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid annual premiums to cover these policies, and as the risks were spread out over the year the annual premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, and as the risks were spread out over time the future premiums were accounted for as current liabilities on the books of the pool members, giving a true impression of profitability

allowed Fortress to claim re-insurance claims payments from the finite reinsurers and paid premiums to cover these deals over a 5 year period, but as the risks were spread out over time the future premiums were not accounted for as current liabilities on the books of the pool members, thus giving a false impression of profitability

Volume growth at the expense of margin.

Excessive reliance on volatile trading income.

Banking is a "for-profit" business, not a means of fulfilling political goals.

A company culture where profits may justify "excesses."

determined by business-unit leaders

determined at the Board level with inputs from business unit leaders

determined at the Board level without influence by business unit leaders

determined by the regulators

Leeson ran the front office

The London office did not ask for any reports

Leeson hid his trades in a suspense account

The margin report sent to London did not show the true margin needs

Define the organization's definition of risk management as articulated by the Board in clear and uncertain terms

Include financial risk management, compliance and external reporting and, to the extent that resources allow, should exclude legal or accounting

Be independently staffed and report to an employee who is on the Executive Committee (Operating Committee) but who is NOT a business unit leader

Review continually the application of the Principles of Good Governance to the Risk Management Infrastructure, financial accounting and reporting infrastructure and the organization as a whole

I and II

I, II and IV

I, II and III

I only

Parliamentarian

Secretary

Vice Chair

Chair only