Operational Risk Problems (Business & Marketing Coursework)

Operational Risk Problems

Please answer the following five questions. They should require approximately one substantive paragraph each. You can write your answers directly into this document.



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Operational Risk – Assignment

Please answer the following five questions. They should require approximately one substantive paragraph each. You can write your answers directly into this document.



Question 1

Consider the following two events: (a)A bank loses $1billion from an unexpected lawsuit relating to its transactions with a counter party and (b) an insurance company loses $1 billion because of an unexpected hurricane in Texas. Suppose that you have the same investment in shares issued by both the bank and the insurance company. Which loss are you more concerned about? Why?



Question 2 Give three examples of cognitive biases.



Question 3 Explain why the end-of-year bonus has, in the past, been regarded as providing

incentives for employees to think only about the short term.



Question 4 Explain the moral hazard problems with deposit insurance. How can they be overcome?



Question 5 Give three examples of the rules that apply to mutual funds, but not to hedge funds.



Please do your own work and make sure you answer all the questions.

It will submit on the Turnitin.

Submission will be sent to Turnitin to be electronically reviewed for plagiarism.