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8020 Testdump | 8020 Questions

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PRMIA 8020 Exam Syllabus Topics:

Topic
Details

Topic 1

Risk Assessment: This section of the exam measures the skills of Financial Risk Analysts and covers methodologies for evaluating risks in different domains, including qualitative and quantitative approaches. It focuses on assessing vulnerabilities, threats, and potential impacts on business operations. A key skill measured is conducting risk impact analysis for financial threats.

Topic 2

Introduction: This section of the exam measures the skills of Risk Analysts and covers fundamental concepts of risk governance, management, and assessment. It introduces key principles, regulatory frameworks, and industry best practices for identifying and addressing risks. A key skill measured is understanding the foundational principles of risk management.

Topic 3

Risk Information: This section of the exam measures the skills of Risk Managers and covers the collection, analysis, and communication of risk-related data. It highlights the role of data-driven decision-making in mitigating uncertainties and ensuring compliance. A key skill measured is interpreting risk data for informed decision-making.

Topic 4

Risk Governance: This section of the exam measures the skills of Compliance Officers and covers the policies, structures, and processes that define how organizations oversee risk. It explores regulatory compliance, ethical considerations, and corporate governance frameworks to ensure accountability. A key skill measured is applying governance frameworks to organizational risk policies.

Topic 5

Insurance Mitigation: This section of the exam measures the skills of Insurance Risk Managers and covers strategies for transferring risk through insurance and other financial instruments. It focuses on risk transfer mechanisms, policy structuring, and claims management. A key skill measured is assessing risk transfer options through insurance.

Topic 6

Risk Management Framework: This section of the exam measures the skills of Risk Managers and covers the development and implementation of structured approaches for risk identification, evaluation, and mitigation. It includes industry-standard frameworks that guide risk strategy and decision-making. A key skill measured is establishing a risk management framework for organizations.

Topic 7

Case Studies: This section of the exam measures the skills of Business Risk Consultants and covers real-world applications of risk management concepts. It examines case studies on risk governance, assessment, and mitigation strategies across different industries. A key skill measured is analyzing historical risk events for strategic insights.

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PRMIA ORM Certificate - 2023 Update Sample Questions (Q29-Q34):

NEW QUESTION # 29
For the TSB case what was the cause of the outage at the heart of the case?

A. Sub-standard risk pricing and risk management left millions of people locked out of their accounts for weeks.
B. Their IT models did not work if prices were discontinuous.
C. A liquidity squeeze by a major hedge-fund via margin calls on trading positions resulted in the collapse of their website.
D. A failed attempts to move customers to a new IT system left millions of people locked out of their accounts for weeks.

Answer: D

Explanation:
Step 1: Understanding the TSB Case
The TSB outage in 2018 was caused by a failed IT migration from its old banking system to a new one.
The transition locked millions of customers out of their accounts for weeks, resulting in financial losses and reputational damage.
Step 2: Why Option C Is Correct
TSB attempted to move customer data to a new banking platform, but serious defects in the migration process led to service failures.
PRMIA and UK Financial Conduct Authority (FCA) reports confirmed that poor IT risk management was a key failure.
Step 3: Why the Other Options Are Incorrect
Option A ("Liquidity squeeze by hedge-fund")
Incorrect because TSB's failure was due to IT migration issues, not a liquidity crisis.
Option B ("Sub-standard risk pricing and risk management")
Incorrect because pricing models were not the cause-it was an IT system failure.
Option D ("IT models did not work if prices were discontinuous")
Incorrect as this issue is more common in high-frequency trading failures, not banking system outages.
PRMIA Risk Reference Used:
UK FCA Investigation on TSB Incident - Confirms IT migration failure as root cause.
PRMIA IT Risk Management Framework - Highlights risks of major IT transitions.
Final Conclusion:
The TSB outage was caused by a failed IT migration, making Option C the correct answer.

NEW QUESTION # 30
Which of the following principles best applies to a compliance function?

A. The compliance function should report to the business (even when following a three lines of defense model).
B. The compliance function should be outsourced if there is a risk function.
C. The risk function should be outsourced if there is a compliance function.
D. The compliance function should be independent of the business (following a three lines of defense model).

Answer: D

Explanation:
Step 1: Compliance Function and the Three Lines of Defense Model
The Three Lines of Defense (3LoD) model ensures that risk management responsibilities are properly segregated:
First Line: Business units (own and manage risk).
Second Line: Compliance and risk management (independent oversight).
Third Line: Internal audit (provides assurance).
Step 2: Why Compliance Must Be Independent
PRMIA and Basel Compliance Principles state that compliance should not report to business units, as this creates a conflict of interest.
Compliance must be independent to ensure objective oversight of regulatory adherence.
Step 3: Why the Other Options Are Incorrect
Option A ("Report to the business") → Incorrect because compliance must provide independent oversight, not report to business units.
Option C ("Outsource compliance if risk function exists") → Incorrect because compliance and risk functions have distinct roles.
Option D ("Outsource risk if compliance exists") → Incorrect because risk management is a core function, not an outsourcing candidate.
PRMIA Risk Reference Used:
PRMIA Compliance Risk Governance - States compliance must be independent under the Three Lines of Defense model.
Basel Compliance Principles - Recommends separate reporting structures for compliance and business units.
Final Conclusion:
Compliance must be independent from the business to avoid conflicts of interest, making Option B the correct answer.

NEW QUESTION # 31
The The Task Force on Climate-related Financial Disclosures (TCFD) was founded by which body?

A. The Financial Stability Board (FSB).
B. The World Bank (WB).
C. The United Nations (UN).
D. The European Commission (EC).

Answer: A

Explanation:
Step 1: What is the TCFD?
The Task Force on Climate-related Financial Disclosures (TCFD) was established to develop climate-related financial risk disclosure recommendations to help investors, lenders, and regulators make informed decisions.
Step 2: Who Founded the TCFD?
The Financial Stability Board (FSB), an international organization that monitors and makes recommendations about the global financial system, founded the TCFD in 2015.
The FSB recognized climate risk as a financial stability issue and launched the TCFD to standardize reporting.
Step 3: Why the Other Options Are Incorrect
Option A ("World Bank") → Incorrect because the World Bank supports climate initiatives but did not create the TCFD.
Option B ("United Nations") → Incorrect because the UN has climate programs like the UNFCCC, but not the TCFD.
Option D ("European Commission") → Incorrect because the EC develops its own sustainability regulations (e.g., SFDR, CSRD), separate from the TCFD.
PRMIA Risk Reference Used:
PRMIA Climate Risk Guidelines - Cites FSB's role in founding the TCFD.
FSB Official Reports (2015) - Confirms that the FSB established the TCFD.
Final Conclusion:
The FSB founded the TCFD in 2015, making Option C the correct answer.

NEW QUESTION # 32
In operational resilience, material customer detriment or significant harm to the customer is which of the following?

A. This is when disruption to a service results in not just an inconvenience to a customer, but a material cost or hardship.
B. This is the ability of a financial system to continue to function, even in the face of significant disruption or financial shocks.
C. This is when disruption to a service results in an inconvenience to a customer and damage to the firm's reputation.
D. This has a low threshold and refers to any inconvenience to a customer that results in a complaint.

Answer: A

Explanation:
Step 1: Definition of Material Customer Detriment
Material customer detriment refers to service disruptions that cause financial loss, inability to access essential services, or significant hardship.
PRMIA and UK FCA Operational Resilience Standards define "significant harm" as going beyond inconvenience to include monetary or operational distress.
Step 2: Why Option D is Correct
Significant harm occurs when customers face tangible financial or service losses, not just reputational inconvenience.
Regulatory frameworks (e.g., Basel, FCA, PRMIA) require banks to protect customers from material disruptions.
Step 3: Why the Other Options Are Incorrect
Option A ("Low threshold, any complaint") → Incorrect because not all complaints indicate material detriment.
Option B ("Inconvenience and reputational damage") → Incorrect because true material harm is more than just inconvenience.
Option C ("Financial system resilience") → Incorrect because this describes systemic financial stability, not customer impact.
PRMIA Risk Reference Used:
PRMIA Operational Resilience Framework - Defines material customer detriment.
UK FCA Operational Resilience Guidelines - Requires firms to minimize severe harm to customers.
Final Conclusion:
Material customer detriment involves actual financial hardship, not just inconvenience, making Option D the correct answer.

NEW QUESTION # 33
Which of the Basel Accords, published in 2004, introduced operational risk as a risk subjected to a capital charge?

A. Basel II
B. Basel IV
C. Basel I
D. Basel III

Answer: A

Explanation:
Introduction of Operational Risk in Basel Accords
Basel I (1988) → Focused only on credit risk and market risk; operational risk was not yet included.
Basel II (2004) → Introduced operational risk as a separate category, subject to capital requirements.
Basel III (2010) → Strengthened capital and liquidity requirements but did not introduce operational risk.
Basel IV (2017, still evolving) → Adjusts Basel III reforms but does not introduce operational risk as a new category.
Why Answer B is Correct
Basel II (2004) was the first to introduce operational risk as a risk requiring a capital charge.
Why Other Answers Are Incorrect
Option
Explanation:
A . Basel I
Incorrect - Basel I focused on credit risk and market risk, with no capital requirements for operational risk.
C . Basel III
Incorrect - Basel III strengthened Basel II but did not introduce operational risk.
D . Basel IV
Incorrect - Basel IV refines Basel III but does not introduce operational risk as a new capital charge.
PRMIA Reference for Verification
Basel II (2004) Operational Risk Framework
PRMIA Operational Risk Management Guidelines

NEW QUESTION # 34
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