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Questions and Answers
What is the key principle of the supervisory review process (SRP) as per the text?
What is the key principle of the supervisory review process (SRP) as per the text?
- Banks must maintain the highest level of capital at all times
- Banks must solely rely on external assessments for capital adequacy
- Banks must have a process for assessing overall capital adequacy in relation to their risk profile (correct)
- Banks must eliminate all risks from their business operations
Who holds the tertiary responsibility for ensuring that the bank has adequate capital to support its risks?
Who holds the tertiary responsibility for ensuring that the bank has adequate capital to support its risks?
- External auditors
- Shareholders
- Board of Directors (correct)
- Regulatory authorities
What is the purpose of the Supervisory Review Process (SRP) of Risk Based Capital Adequacy Framework?
What is the purpose of the Supervisory Review Process (SRP) of Risk Based Capital Adequacy Framework?
- To encourage banks to operate without any capital
- To discourage banks from using risk management techniques
- To eliminate all risks from banks' business operations
- To ensure banks have adequate capital to support all the risks in their business (correct)
Who bears the primary responsibility for ensuring that the bank has adequate capital to support its risks?
Who bears the primary responsibility for ensuring that the bank has adequate capital to support its risks?
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What is the intended outcome of the Supervisory Review Process (SRP) of Risk Based Capital Adequacy Framework?
What is the intended outcome of the Supervisory Review Process (SRP) of Risk Based Capital Adequacy Framework?
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