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CMA Final · Strategic Performance Management and Business Valuation · Risk Management

Which risk is best described as the possibility of loss arising from inadequate or failed internal processes, people, systems or external events?

This describes operational risk, defined as loss from failed or inadequate internal processes, people and systems, or from external events. Market, credit and liquidity risks arise from price changes, counterparty default and funding or asset-sale constraints respectively.

  1. AOperational riskCorrect
  2. BMarket risk
  3. CCredit risk
  4. DLiquidity risk

Explanation

This is the standard definition of operational risk. Market risk arises from price movements, credit risk from counterparty default, and liquidity risk from inability to meet obligations or sell assets at fair value.

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