Newbie needs help

[Lenka2019]

Hello, I just started my learning journey today, however, It seemed to be tough. After having finished reading the chapter 1 of the offically issued textbook, I did the questions at the end of this chapter. I just got 50% correct..... I am a newbie and need helps. Could you please help me to explain following questions:
Page 27
1.16 Why aren't the banking regulators encouraging tools that support using advanced analystical formulas to calculate regulatory operational risk capital?
1.21 Business risk involves making large, long-term decisions about the firm's direction, often accompanied by major investment of capital, human resources, and management reputation._______Why is this false?
1.22 Enterprise Risk Management is the management of risk at the business unit level.________Why is this false?
1.23 Why is securitation a mechanism to transfer risk to third party? I think the answer should be Insurance.
1.26 Tail risk techniques are dealt by Extreme Value Theory. _________ I can't tell the differences of Extreme Value theory, VAR, and Probably of default theory.
1.31 Could you please explain the purpose of economic capital, why isn't is to absorb unexpected loss and tail loss?

 

[Nicole Seaman]

Hello, I just started my learning journey today, however, It seemed to be tough. After having finished reading the chapter 1 of the offically issued textbook, I did the questions at the end of this chapter. I just got 50% correct..... I am a newbie and need helps. Could you please help me to explain following questions:
Page 27
1.16 Why aren't the banking regulators encouraging tools that support using advanced analystical formulas to calculate regulatory operational risk capital?
1.21 Business risk involves making large, long-term decisions about the firm's direction, often accompanied by major investment of capital, human resources, and management reputation._______Why is this false?
1.22 Enterprise Risk Management is the management of risk at the business unit level.________Why is this false?
1.23 Why is securitation a mechanism to transfer risk to third party? I think the answer should be Insurance.
1.26 Tail risk techniques are dealt by Extreme Value Theory. _________ I can't tell the differences of Extreme Value theory, VAR, and Probably of default theory.
1.31 Could you please explain the purpose of economic capital, why isn't is to absorb unexpected loss and tail loss?

Hello @Lenka2019

I have not gone through your questions in detail yet, however, we ask that you do not post one forum thread with 6 different questions. Our forum is organized by topic and there are search and tag functions so you can look for answers to the concepts that you are having trouble with. If you cannot find a thread for that specific question, then you can post a new thread for it. Also, we ask that when you do post a GARP practice question that you copy/paste the entire question and answer so we do not have to search through the books to find them. We are happy to support all of our members to help them understand the concepts, but we need to keep things organized. There is a helpful blog post here that explains how the forum is organized and how to use it most efficiently: https://www.bionicturtle.com/utilizing-the-bionic-turtle-frm-forum/.

I will need to come back to this to go through the questions that you have asked, but in the meantime, if you could please use the search function to see if you can find threads that may already answer your questions, that would be very helpful. Here is the search function: https://forum.bionicturtle.com/search/?type=post. Just type in the concept you are looking for and the results will bring up the threads that discuss it. For example, for question 1.26, you can search the forum for Extreme Value Theory. Many of these concepts are already discussed in detail within the forum.