Certification Examination Practice

Illinois Operational Risk Manager Certification Examination Practice Questions And Correct Answers (Verified Answers) Plus Rationales 2026 Q&A | Instant Download Pdf

• Which of the following best describes operational risk?
• The risk of losses from market movements
• The risk of losses from failing to meet regulatory capital

requirements

• The risk of loss resulting from inadequate or failed internal

processes, people, systems, or from external events

• The risk that an investment portfolio underperforms its benchmark

Rationale: Operational risk is defined as losses from internal process

failures, people, systems, or external events (including legal risk); market risk and credit risk are separate risk types. 1 / 4

• Which tool is most commonly used for identifying and documenting

risks within individual business units?

• Monte Carlo simulation
• Risk and Control Self-Assessment (RCSA)
• Value-at-Risk (VaR) model
• Discounted cash flow analysis

Rationale: RCSAs are used by business units to identify, assess and

document operational risks and controls.

• Which key risk indicator (KRI) is the best example for operational risk

in a payment processing unit?

• Gross revenue growth rate
• Staff turnover across the firm
• Number of failed or late transactions per month
• Stock price volatility

Rationale: KRIs are measurable metrics that provide early warning —

failed/late transactions directly signal operational issues in payments.

• In scenario analysis for operational risk, what is the primary purpose?
• To calculate expected credit losses for loans
• To assess potential extreme loss events that are not captured by

historical data

• To forecast market risk over one trading day
• To set interest rate policies

Rationale: Scenario analysis helps evaluate low-probability, high- 2 / 4

impact operational events using expert judgment, beyond historical loss data.

• Which of the following is an example of an operational control?
• Hedging foreign exchange exposure
• Maintaining a diversified investment portfolio
• Dual approval requirement for wire transfers above a threshold
• Issuing new equity to strengthen capital ratios

Rationale: Dual approval for large wires is an internal control designed

to reduce operational error and fraud risk.

• What is the main advantage of maintaining an Operational Risk Loss

Database?

• It eliminates the need for insurance
• It provides historical loss data to support measurement, trends

and capital assessment

• It guarantees regulatory compliance automatically
• It reduces market risk volatility

Rationale: A central loss database enables trend analysis, root-cause

study, and model calibration for operational risk.

• Which governance body typically has ultimate responsibility for an

organization’s operational risk framework?

• Internal audit function
• Front-line business unit managers only
• Board of Directors (or equivalent) supported by senior 3 / 4

management

• External consultants

Rationale: Oversight of risk frameworks is the Board’s ultimate

responsibility; senior management implements and oversees controls.

• When assessing third-party/vendor risk, which factor is most critical?
• The vendor’s logo design
• The vendor’s office location aesthetics
• The vendor’s operational resiliency and business continuity

arrangements

• The number of years since vendor founding only

Rationale: Operational resiliency and continuity determine whether

the vendor can maintain critical services during disruption.

9. Business continuity planning (BCP) primarily aims to:

• Maximize daily profits
• Reduce tax liabilities
• Ensure critical business functions continue or are resumed quickly

after disruption

• Replace risk management departments

Rationale: BCP prepares organizations to maintain or restore critical

functions during and after incidents.

• Which of the following best describes "near-miss" reporting in

operational risk management?

• Reporting only when a loss occurs
• / 4