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    Question

    Which of the following risk is the bank facing when an

    individual is unable to pay back the overdraft taken by him?
    A Market Risk Correct Answer Incorrect Answer
    B Credit Risk Correct Answer Incorrect Answer
    C Interest Rate Risk Correct Answer Incorrect Answer
    D Operational Risk Correct Answer Incorrect Answer
    E Liquidity Risk Correct Answer Incorrect Answer

    Solution

         Credit Risk is the risk of non-recovery of loan or risk of default.      Market risk – risk from change in market value of assets Interest rate risk – risk from change in interest rate Liquidity risk – risk of not having enough liquid assets to meet short term obligations Operational risk - from inadequate or failed procedures, systems or policies, employee    errors, systems failures, fraud or other criminal activity, any event that disrupts business processes

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