FRM Part II · FRM Exam Part II · Introduction to Operational Risk and Resilience
Operations staff at a bank mistakenly enter the wrong settlement date on a large securities trade, causing a failed settlement and penalty charges from the counterparty. Which Basel event type applies?
This is execution, delivery and process management. A manual data entry error causing a failed settlement is a transaction processing failure. It is not a system outage, so business disruption does not apply, and nothing suggests fraud.
- ABusiness disruption and system failures
- BExecution, delivery and process managementCorrect
- CExternal fraud
- DClients, products and business practices
Explanation
Data entry errors, missed deadlines and failed settlements with counterparties are classic execution, delivery and process management events. Business disruption requires outages of systems or infrastructure, and none occurred. No fraud or client suitability issue is involved.
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