• Exam Code: 8010
  • Exam Name: Operational Risk Manager (ORM) Exam
  • Certification Provider: PRMIA
  • Corresponding Certification:PRM Certification
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PRMIA 8010 Exam Syllabus Topics:

SectionObjectives
Measurement and Quantification- Key risk indicators (KRIs)
- Loss distribution approaches
Risk Governance and Frameworks- Three lines of defense model
- Risk governance structures and accountability
Mitigation and Control- Internal controls and control testing
- Risk transfer mechanisms including insurance
Risk Identification and Assessment- Risk and control self-assessment (RCSA)
- Scenario analysis and risk mapping
Operational Risk Fundamentals- Operational risk within enterprise risk management
- Definition and scope of operational risk
- Risk taxonomy and loss event types
Regulatory and Industry Standards- Basel operational risk frameworks
- Regulatory expectations for operational risk management

PRMIA Operational Risk Manager (ORM) Sample Questions:

Question 1

Which of the following statements are true:
I. Credit VaR often assumes a one year time horizon, as opposed to a shorter time horizon for market risk as credit activities generally span alonger time period.
II. Credit losses in the banking book should be assessed on the basis of mark-to-market mode as opposed to the default-only mode.
III. The confidence level used in the calculation of credit capital is high when the objective is tomaintain a high credit rating for the institution.
IV. Credit capital calculations for securities with liquid markets and held for proprietary positions should be based on marking positions to market.

A. II and III
B. I, III and IV
C. I and III
D. I and II


Question 2

Which of the following is closest to the description of a 'risk functional'?

A. A risk functional assigns a penalty value for the difference between a model distribution and a risk's severity distribution
B. Risk functional refers to the Kolmogorov-Smirnov distance
C. A risk functional is the distribution thatmodels the severity of a risk
D. A risk functional is a model distribution that is an approximation of the true loss distribution of a risk


Question 3

A corporate bond maturing in 1 year yields 8.5% per year,while a similar treasury bond yields 4%. What is the probability of default for the corporate bond assuming the recovery rate is zero?

A. 8.50%
B. 4.50%
C. Cannot be determined from the given information
D. 4.15%


Question 4

According to the Basel framework, reserves resulting from the upward revaluation of assets are considered a part of:

A. Tier 1 capital
B. Tier 2 capital
C. All of the above
D. Tier 3 capital


Question 5

The standalone economic capital estimates for the three business units of a bank are $100, $200 and $150 respectively. What is the combined economic capital for the bank, assuming the risks of the three business units are perfectly correlated?

A. 72500
B. 450
C. 269
D. 21


Solutions:

Question 1
Answer: B
Question 2
Answer: A
Question 3
Answer: D
Question 4
Answer: B
Question 5
Answer: B

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