Skip to content

FRM Part II · FRM Exam Part II · Risk Identification

During a process mapping exercise of a loan origination workflow, an analyst finds that a credit officer manually re-keys data from a PDF into the core system, and the only check is a visual review by the same officer. Which is the most appropriate identification-stage conclusion?

The manual re-keying with review by the same officer is a risk point with a weak control because there is no independent verification. It should be captured in the risk inventory for assessment, rather than dismissed because a review step exists or deferred until losses occur.

  1. AThere is no risk because the process has a review step
  2. BThe step is a key-person issue only and has no error implications
  3. CThe manual re-keying with self-review is a risk point with a weak control, given the lack of independent verification, and should be recorded in the risk inventoryCorrect
  4. DThe step should be ignored until losses are recorded

Explanation

Manual data entry creates error and fraud exposure, and a check by the same person is not independent. Identification should record this as a risk with an inadequate control. Waiting for losses is reactive and a self-review does not remove the exposure.

Did you get it right without looking?

One question tells you little. A timed set on Risk Identification shows your real accuracy, how long you take and where you lose marks.

Practise Risk IdentificationFree diagnostic mock

More Risk Identification questions