Question
A ransomware attack disrupts trading and exposes client data. What type of risk is this?
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Answer
Cyber risk.
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Question
Low-probability, high-severity events are best classified as what type of risk?
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Answer
Tail risk.
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Question
Why is standard deviation an incomplete risk measure for downside-focused investors?
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Answer
It treats upside and downside volatility equally.
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Question
An IT outage prevents traders from closing positions while prices move against them. What does this illustrate?
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Answer
Risk interactions: operational risk can trigger liquidity and market risk.
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