ACCA Strategic Professional · Strategic Business Leader · Identification, assessment and measurement of risk
Marlow Bank's directors discover that a newly launched mobile app has a flaw allowing customer data to be exposed. Customers might leave and the regulator might fine the bank, but the main concern recorded by the risk committee is the loss of public trust in the bank's brand. Which classification best captures this primary concern?
Reputational risk best describes it. The data exposure from the app flaw damages the bank's standing and customer trust. Market and liquidity risks are possible knock-on effects but are not the primary concern recorded, which is brand and public confidence.
- AReputational risk, which is a consequence of the underlying technology failureCorrect
- BMarket risk, because customers may switch providers
- CLiquidity risk, because customers may withdraw deposits
- DBusiness risk of a normal trading cycle
Explanation
The primary concern is loss of trust, which is reputational risk triggered by an operational or technology failure. Market risk relates to price movements, and liquidity risk is not the stated concern. Although deposits might fall later, the recorded issue is trust.
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