2025 8020: Fantastic ORM Certificate - 2023 Update Sample Questions

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PRMIA 8020 Exam Syllabus Topics:

Topic	Details
Topic 1	Risk Information: This section of the exam measures the skills of Risk Managers and covers the collection, analysis, and communication of risk-related data. It highlights the role of data-driven decision-making in mitigating uncertainties and ensuring compliance. A key skill measured is interpreting risk data for informed decision-making.
Topic 2	Risk Management Framework: This section of the exam measures the skills of Risk Managers and covers the development and implementation of structured approaches for risk identification, evaluation, and mitigation. It includes industry-standard frameworks that guide risk strategy and decision-making. A key skill measured is establishing a risk management framework for organizations.
Topic 3	Risk Governance: This section of the exam measures the skills of Compliance Officers and covers the policies, structures, and processes that define how organizations oversee risk. It explores regulatory compliance, ethical considerations, and corporate governance frameworks to ensure accountability. A key skill measured is applying governance frameworks to organizational risk policies.
Topic 4	Introduction: This section of the exam measures the skills of Risk Analysts and covers fundamental concepts of risk governance, management, and assessment. It introduces key principles, regulatory frameworks, and industry best practices for identifying and addressing risks. A key skill measured is understanding the foundational principles of risk management.
Topic 5	Risk Assessment: This section of the exam measures the skills of Financial Risk Analysts and covers methodologies for evaluating risks in different domains, including qualitative and quantitative approaches. It focuses on assessing vulnerabilities, threats, and potential impacts on business operations. A key skill measured is conducting risk impact analysis for financial threats.
Topic 6	Insurance Mitigation: This section of the exam measures the skills of Insurance Risk Managers and covers strategies for transferring risk through insurance and other financial instruments. It focuses on risk transfer mechanisms, policy structuring, and claims management. A key skill measured is assessing risk transfer options through insurance.
Topic 7	Case Studies: This section of the exam measures the skills of Business Risk Consultants and covers real-world applications of risk management concepts. It examines case studies on risk governance, assessment, and mitigation strategies across different industries. A key skill measured is analyzing historical risk events for strategic insights.

PRMIA ORM Certificate - 2023 Update Sample Questions (Q58-Q63):

NEW QUESTION # 58
Which of the following statements best defines the properties of top-down key risk indicators?

A. Selected by junior management, used to manage changes in the business environment especially under periods of stress, and reported on an annual basis
B. Selected by senior management, tied to material external and internal loss exposures and scenarios, and used to manage changes in the business environment, especially under periods of stress.
C. Selected by senior management, used to manage changes in the business environment especially under periods of stress, and reported on a daily basis.
D. Can only be selected by the board in line with risk ratings.

Answer: B

Explanation:
Definition of Key Risk Indicators (KRIs)
KRIs are quantitative metrics used to monitor risk levels and detect early warning signs of potential risk events.
Top-down KRIs are identified at the senior management level and focus on enterprise-wide risk exposure.
Key Properties of Top-Down KRIs
Selected by senior management to ensure alignment with strategic objectives.
Tied to material external and internal loss exposures to capture critical financial, operational, and strategic risks.
Used to manage changes in the business environment to ensure proactive risk response, especially under stress conditions.
Why Other Answers Are Incorrect
Option
Explanation:
B . Selected by senior management, used to manage changes in the business environment, especially under periods of stress, and reported on a daily basis.
Incorrect - Top-down KRIs are not reported daily; they are monitored periodically (e.g., quarterly).
C . Selected by junior management, used to manage changes in the business environment, especially under periods of stress, and reported on an annual basis.
Incorrect - Junior management does not define top-down KRIs; senior management does. Also, annual reporting is too infrequent.
D . Can only be selected by the board in line with risk ratings.
Incorrect - The board provides oversight, but senior risk management selects KRIs, not just the board.
PRMIA Reference for Verification
PRMIA Risk Indicator Guidelines
Basel Committee on Banking Supervision (BCBS) Principles for Effective Risk Data Aggregation

NEW QUESTION # 59
In relation to the template for writing policy documents, which one of the following pairings of requirements is correct? A well designed policy will include:

A. To whom the policy applies to and how an additional management report should be allocated to.
B. A list of exceptions for the family of board members.
C. A list of acceptable fonts and margin types.
D. To whom and in what form exceptions should be sought and the general exemptions e.g. areas to which the policy does not apply

Answer: D

Explanation:
Step 1: Key Elements of a Well-Designed Policy Document
A well-designed policy should include:
Scope - Who the policy applies to.
Exception Handling - How and where exceptions should be requested.
Accountability - Who is responsible for enforcement.
Step 2: Why Option C is Correct
A policy must clearly define exceptions and the process for requesting them.
It should also define areas where the policy does not apply to avoid confusion.
Step 3: Why the Other Options Are Incorrect
Option A ("List of exceptions for board members' families") → Incorrect because policies should apply consistently to all stakeholders.
Option B ("List of acceptable fonts and margin types") → Incorrect because formatting is secondary to content clarity.
Option D ("To whom the policy applies and an additional management report") → Incorrect because policy scope should not include unnecessary reports.
PRMIA Risk Reference Used:
PRMIA Policy Writing Guidelines - Defines policy structure and exception handling.
ISO 19600 Compliance Management Standard - Supports clear, well-documented policies.
Final Conclusion:
A well-designed policy clearly defines exceptions and their handling process, making Option C the correct answer.

NEW QUESTION # 60
When a single operational risk event leads to losses in multiple business lines or impacts across several event types, how should these linked losses be treated?

A. Allocate entire loss to the business line for which the loss is greatest.
B. Each business line should take it's own discretion as to how the losses are treated.
C. Either allocate entire loss to the business line for which the loss is greatest or pro-rate the loss across the affected business line.
D. Pro-rate the loss across the affected business line.

Answer: C

Explanation:
Step 1: Understanding Linked Losses in Operational Risk
In operational risk events, a single event can impact multiple business lines or event types (e.g., IT failure affecting retail banking and wealth management).
Proper loss attribution is important for accurate risk reporting and regulatory compliance under Basel III.
Step 2: Why Option C is Correct
Basel III and PRMIA guidance allow institutions flexibility in how to allocate linked losses:
Entire loss can be allocated to the business line with the largest loss impact for simplified reporting.
Loss can be pro-rated across affected business lines for more accurate attribution.
Step 3: Why the Other Options Are Incorrect
Option A ("Allocate entire loss to the business line with the greatest loss") → Partially correct, but not always required-some firms prefer pro-rating.
Option B ("Pro-rate the loss") → Partially correct, but allocating to the largest impacted business line is also acceptable.
Option D ("Each business line decides how to treat losses") → Incorrect because loss allocation should follow a defined policy, not business line discretion.
PRMIA Risk Reference Used:
Basel III Operational Risk Framework - Discusses loss attribution for multi-line impact events.
PRMIA Loss Event Management Guidelines - Supports both full allocation and pro-rating.
Final Conclusion:
Firms can either allocate the full loss to the most impacted business line or pro-rate it across affected lines, making Option C the correct answer.

NEW QUESTION # 61
For the TSB case what was the cause of the outage at the heart of the case?

A. Their IT models did not work if prices were discontinuous.
B. A failed attempts to move customers to a new IT system left millions of people locked out of their accounts for weeks.
C. A liquidity squeeze by a major hedge-fund via margin calls on trading positions resulted in the collapse of their website.
D. Sub-standard risk pricing and risk management left millions of people locked out of their accounts for weeks.

Answer: B

Explanation:
Step 1: Understanding the TSB Case
The TSB outage in 2018 was caused by a failed IT migration from its old banking system to a new one.
The transition locked millions of customers out of their accounts for weeks, resulting in financial losses and reputational damage.
Step 2: Why Option C Is Correct
TSB attempted to move customer data to a new banking platform, but serious defects in the migration process led to service failures.
PRMIA and UK Financial Conduct Authority (FCA) reports confirmed that poor IT risk management was a key failure.
Step 3: Why the Other Options Are Incorrect
Option A ("Liquidity squeeze by hedge-fund")
Incorrect because TSB's failure was due to IT migration issues, not a liquidity crisis.
Option B ("Sub-standard risk pricing and risk management")
Incorrect because pricing models were not the cause-it was an IT system failure.
Option D ("IT models did not work if prices were discontinuous")
Incorrect as this issue is more common in high-frequency trading failures, not banking system outages.
PRMIA Risk Reference Used:
UK FCA Investigation on TSB Incident - Confirms IT migration failure as root cause.
PRMIA IT Risk Management Framework - Highlights risks of major IT transitions.
Final Conclusion:
The TSB outage was caused by a failed IT migration, making Option C the correct answer.

NEW QUESTION # 62
For the Barings case study, what external event may have accelerated the discovery of the loss event?

A. The Kobe earthquake of January 17th 1995.
B. The collapse of Lehman Brothers into bankruptcy m 2008.
C. The collapse of Lehman Brothers into bankruptcy in 2002.
D. The Singapore earthquake of January 17th 1995.

Answer: A

Explanation:
Background of the Barings Case Study
The Barings Bank collapse occurred due to unauthorized derivatives trading by Nick Leeson in Singapore.
Leeson concealed losses, and his trading positions became unmanageable.
How the Kobe Earthquake Affected Barings
On January 17, 1995, the Kobe earthquake caused extreme market volatility.
Leeson's unauthorized trades were highly exposed to the Nikkei 225 index, and the earthquake triggered heavy losses.
The event accelerated the exposure of Leeson's fraudulent activities, leading to Barings' collapse.
Why Answer D is Correct
The Kobe earthquake created market turmoil, forcing Barings to confront its financial position, ultimately revealing the hidden losses.
Why Other Answers Are Incorrect
Option
Explanation:
A . The collapse of Lehman Brothers into bankruptcy in 2002.
Incorrect - Lehman Brothers collapsed in 2008, not 2002.
B . The Singapore earthquake of January 17th, 1995.
Incorrect - No significant earthquake occurred in Singapore on that date.
C . The collapse of Lehman Brothers into bankruptcy in 2008.
Incorrect - Barings collapsed in 1995, not related to Lehman Brothers' 2008 failure.
PRMIA Reference for Verification
PRMIA Case Study on Barings Bank Collapse
Basel Committee Principles on Risk Oversight and Fraud Prevention

NEW QUESTION # 63
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2025 8020: Fantastic ORM Certificate - 2023 Update Sample Questions

8020 New Study Materials & Reliable 8020 Real Test

PRMIA 8020 Exam Syllabus Topics:

PRMIA ORM Certificate - 2023 Update Sample Questions (Q58-Q63):

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