15 Questions
What does fraud risk encompass?
Risk of unauthorized activities like theft and forgery committed by employees, customers, or external parties
What are examples of fraud risk?
Fraudulent attempts to obtain sensitive information through deceptive emails or phone-call scams
What are the potential consequences of fraud risk for banks?
Financial losses, legal and regulatory penalties, and a loss of customer trust
How can fraud risk lead to financial losses for a bank?
Individuals providing false information or documents to obtain loans from a bank
What is one way unauthorized individuals exploit fraud risk?
Gaining access to customers' personal information and using it to open fake accounts or make unauthorized transactions
What is fraud risk?
The potential for financial loss resulting from fraudulent activities within a bank
Who can commit fraudulent activities within a bank?
Employees, customers, or external parties
What are examples of fraud risk?
Fraudulent attempts to obtain sensitive information and individuals providing false information to obtain loans
What are the potential consequences of fraud risk for a bank?
Financial losses, legal and regulatory penalties, and a loss of customer trust
What is a significant threat posed by fraud risk?
Loss of customer trust
What is an example of legal/regulatory non-compliance risk for a bank?
Legal disputes arising from contracts, such as loan agreements
Which of the following is a potential source of legal risk for a bank?
Violations of laws and regulations
What is a consequence of legal/regulatory non-compliance risk for a bank?
Adverse legal judgments and fines
What is encompassed by legal/regulatory non-compliance risk?
Non-compliance with document retention and record-keeping requirements
What can lead to legal risk for a bank?
Regulatory investigations
Study Notes
Fraud Risk
- Fraud risk encompasses the threat of financial loss or reputation damage due to fraudulent activities, which can be committed by internal or external individuals.
- Examples of fraud risk include identity theft, phishing scams, and fraudulent transactions.
- The potential consequences of fraud risk for banks include financial losses, reputational damage, and legal/regulatory non-compliance.
- Fraud risk can lead to financial losses for a bank through unauthorized transactions, stolen funds, and compromised customer data.
- Unauthorized individuals can exploit fraud risk by impersonating bank employees, customers, or vendors to gain access to sensitive information.
Legal/Regulatory Non-Compliance Risk
- Legal/regulatory non-compliance risk encompasses the threat of financial loss or reputation damage due to non-compliance with laws, regulations, or industry standards.
- An example of legal/regulatory non-compliance risk for a bank is failing to implement adequate anti-money laundering controls.
- The potential consequences of legal/regulatory non-compliance risk for a bank include fines, penalties, reputational damage, and legal action.
- A significant threat posed by fraud risk is that it can lead to legal/regulatory non-compliance risk.
- Sources of legal risk for a bank can include failure to comply with consumer protection laws, data privacy regulations, and industry standards.
Test your knowledge of fraud risk with this quiz. Explore the potential for financial loss due to fraudulent activities within a bank, including unauthorized activities such as theft, embezzlement, forgery, and falsification of financial records by employees, customers, or external parties.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
