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FINC 4720 Test 2

Terms in this set (28)

Which of the following is not a component of managing cybersecurity risk?

A. Identifying cyber attacks
B. Responding to cyber incidences
C. Developing new cyber attacks
D. Preventing cyber incidences
E. Formulating cybersecurity risk strategy
C
Which of the following tools will allow a financial institution to minimize its cybersecurity risk?

A. Shredding documents instead of burning documents
B. Requiring all documents to be placed under lock and key
C. Requiring all employee IDs to have a special code to identify which employee has access confidential documents
D. Encrypting every confidential document before it is transmitted electronically
E. Hiring 3 instead of 2 security guards to safeguard confidential documents
D
Which of the following would be considered a cybersecurity breach?

A. An individual electronically altering his online financial institution account to inflate the balance
B. An employee who alters the financial institution's payroll database to see how much his manager is being paid
C. An employee who steals confidential documents from the financial institution's vault and sells it to a competing financial institution
D. A financial institution manager ensures that a loan is approved to his coarsen with a low credit score
E. A laptop containing confidential information on deposit volume is stolen
A
Which of the following cyber incidents involves a hacker disguising itself as a legitimate website to steal confidential information that users provide?

A. Man in the middle exploit
B. ATM cash out
C. Ransomware
D. Phishing
E. Distributed detail of service
D
Which of the following can financial institutions impose on their customers to assist minimizing the institutions' cybersecurity risk exposure?

I. Setting maximum password lengths
II. Requiring passwords to be alpha- numeric with special characters
III. Limiting the number of log-in attempts
IV. Requiring passwords to be changed periodically

A. I, II, and III only
B. II, III, and IV only
C. I, III, and IV only
D. I, II, and IV only
E. I, II, III, IV
B
Which of the following cyber incidents will limit user access to the services offered by a financial institution?

A. Man in the middle exploit
B. ATM cash out
C. Ransomware
D. Phishing
E. Distributed denial of service
E
The following email sent to a financial institution's customer is evidence of ________________________

Dear Mrs. Brown,
To create space for more depositors we are deleting all inactive deposit accounts. Here is what you have to send us to save your account from getting deleted:

-Name (first and last)
-Account login
-Password
-Date of birth
-Social security number

If we don't receive the above information from you by the end of the week, your deposit account will be removed.

A. Distributed detail of service
B. Ransomware
C. Phishing
D. Man in the middle exploit
E. ATM cash out
C
Which of the following is not a fundamental element of cybersecurity for financial institutions?

A. A recovery plan for a cyber-incident
B. Cybersecurity governance framework
C. Risk assessment of cyber incidents
D. Employment of ethical hackers to test cybersecurity systems
E. Documented cybersecurity framework
D
Which of the following is a major obstacle limiting the progression of cybersecurity?

A. Scarce technical expertise in cybersecurity
B. Limited information sharing among financial institutions
C. Hackers are always a step ahead of financial institutions
D. Not every bank has an online presence
E. Cyber insurance is too expensive for some financial institutions
B
Which of the following cybersecurity tools is reactive than preventative?

A. Cyber insurance
B. Penetration testing
C. Anti-malware software
D. Multi-factor authentication systems
E. Consumer education
A
Who would do the following:

Compile a class action lawsuit against the financial institution to force it to pay dividends
Investing market
Who would do the following:

Report the financial institution's weakness in its money laundering framework to the Board of Directors
Compliance function
Who would do the following:

Implement the financial institution's risk management framework
Executive management
Who would do the following:

Verify whether large loans receive the required approvals before they are disbursed
Internal audit function
Who would do the following:

Approve all the policies of the financial institution
Board of directors
Who would do the following:

Review the financial institution's financial statements to ensure it is a true and fair representation of its financial performance
External auditors
Who would do the following:

Require the financial institution to be wound up if its is no longer considered to be a going concern
Financial sector regulators
Who would do the following:

Advise the board of directors whether the credit risk limits established are reasonable
Risk management function
Who would do the following:

Recruit and retain the best employees possible to do the job
Executive management
Who would do the following:

Withdraw their deposits if they perceive the financial institution to be too risky
Investing market
How do you calculate charge off rate?
Annual Net Charge off/ Average Balance
How do you calculate average charge off rate over 5 years?
Sum of all annual Charge off Rate/ 5
How do you calculate amortized costs?
Previous year amortized cost- estimated payments
last year should be zero
How do you calculate expected credit loss?
Amortized cost * average annual charge off rate
How do you calculate total unadjusted expected credit loss?
Sum of expected credit loss
How do you calculate unadjusted expected loss rate?
Total unadjusted credit loss/ first year amortized cost
What is 1 basis point?
.01%
How do you calculate adjusted expected loss rate?
First year amortized cost * (unadjusted expected loss rate + basis point)
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