55 Questions (About 15 Questions on exam) Reference: 1. The nominal risk-free rate is best described as the sum of the real risk-free rate and a premium for: A. maturity. B. liquidity. C. expected inflation. C is correct. The nominal risk-free rate is approximated as the sum of the real risk-free interest rate and an inflation premium.…
Risk transfer is the process of passing on a risk to another party, often, but not always, in the form of an insurance policy. Risk Shifting
Risk Prevention and Avoidance Risk Acceptance: Self-Insurance and Diversification
Drivers Metrics
Financial Risks Non-Financial Risks
Risk budgeting picks up where risk tolerance leaves off. Whereas risk tolerance focuses on the appetite for risk and what is and is not acceptable, risk budgeting has a more specific focus on how that risk is taken. Risk budgeting quantifies and allocates the tolerable risk by specific metrics; it extends and guides implementation of the…
An Enterprise View of Risk Governance
A risk management framework flows logically from the definition of risk management that was previously given: It is the infrastructure, process, and analytics needed to support effective risk management in an organisation. Despite customisation, every risk management system or framework should address the following key factors:
