What is the pass mark for the CISI Operational Risk exam?

The pass mark is 70%. You must answer at least 35 out of the 50 multiple-choice questions correctly within the 60-minute time limit.

Is the Operational Risk exam suitable for beginners?

While it covers advanced concepts like Basel III and risk modelling, it is a Level 3 qualification and accessible for practitioners looking to formalise their knowledge.

How long should I study for the CISI Operational Risk exam?

Most candidates dedicate between 70 to 100 hours of study time, depending on their prior industry experience in risk management or compliance.

What are the core topics covered in the syllabus?

Key areas include the regulatory environment (Basel frameworks, FCA guidelines), risk identification and assessment, cyber risk, and enterprise risk management (ERM).

A retail bank based in France opens a new savings account for an individual who is a resident of France but holds US citizenship. The bank fails to identify the customer as a US person and does not report the account details to the US Treasury. Under which legislation is the bank primarily facing compliance risks?

Foreign Account Tax Compliance Act (FATCA)

A senior director at a UK-listed company suggests that in order to align her interests with the company's short-term quarterly targets, she should personally decide her remuneration outcome and base it solely on quarterly profits. Under the UK Corporate Governance Code 2018, how should this suggestion be addressed?

It should be rejected because remuneration policies should promote long-term sustainable success and no director should be involved in deciding their own remuneration.

It should be approved since directors are encouraged to align their interests with shareholder quarterly returns.

It should be rejected because executive remuneration is determined solely by the shareholders, not the board.

It should be approved, provided she discloses her remuneration outcome at the general meeting.

A risk manager at a bank is analysing a portfolio of foreign exchange forward contracts. To quantitatively assess the severity of the credit risk, the manager calculates the current obligation outstanding and then uses statistical techniques within a Value at Risk (VaR) framework to calculate the likely maximum loss over the life of the contracts. What two elements is the manager combining to determine the overall credit exposure?

Current exposure and Potential future exposure

Market depth and Potential future exposure

Pre-settlement exposure and Direct exposure

Expected shortfall and Current exposure

How does the Basel Committee on Banking Supervision (BCBS) formally define Operational Risk?

The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

What is the difference between Funding Liquidity Risk and Market Liquidity Risk?

Funding Liquidity Risk is lacking sufficient cash to fulfill transactions, whereas Market Liquidity Risk is the inability to close out a position because the market itself is illiquid.

What is Enterprise Risk Management (ERM)?

An integrated, firm-wide approach to managing all of an organization's interrelated risks to protect shareholder value.

What is the purpose of a Risk Register?

It serves as a central database of all identified risks, detailing their source, impact, likelihood, and the countermeasures used to mitigate them.

What is the primary role of the Chief Risk Officer (CRO)?

To ensure efficient and effective governance of significant risks, oversee ERM, and ensure regulatory compliance.

CISI Operational Risk Exam Guide: Everything You Need to Know

Table of Contents

• Understanding the Syllabus
• Key Focus Areas for the Exam
- 1. The Basel Frameworks
- 2. Risk Assessment and Mitigation
- 3. Cyber Security
• Preparation Strategies
- Start with the Official Workbook
- Practice with Realistic Mock Exams
- Utilise Flashcards for Key Terms
• Conclusion

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CISI Operational Risk

Join thousands of students who passed on their first attempt.

The CISI Operational Risk qualification is a pivotal certification for professionals navigating the complex landscape of risk management in modern financial services. From the principles of the Basel Committee to the nuances of cyber risk and internal governance, this exam tests your ability to identify, assess, and mitigate risks that could severely impact a firm’s operational stability.

In this guide, we will break down the syllabus, explore key topics, and provide actionable strategies to help you pass the exam on your first attempt.

Understanding the Syllabus

The CISI Operational Risk syllabus is comprehensive, designed to ensure candidates understand not only the theory of risk but its practical application in a regulatory context. The exam consists of 50 multiple-choice questions, and you have 60 minutes to complete it. The pass mark is 70%.

The syllabus is divided into several key chapters, with varying weightings:

Introduction to Risk in Financial Services
Other Major Risks (Credit, Market, Liquidity)
Operational Risk Fundamentals
The Regulatory Environment (Basel III, FCA guidelines)
Identifying and Assessing Operational Risk
Mitigating and Controlling Operational Risk
Cyber Security and Emerging Risks

Key Focus Areas for the Exam

1. The Basel Frameworks

A significant portion of the exam is dedicated to the regulatory environment, particularly the Basel Committee on Banking Supervision (BCBS). You must understand the evolution from Basel I to Basel III, focusing on the three pillars:

Pillar 1: Minimum Capital Requirements
Pillar 2: Supervisory Review Process
Pillar 3: Market Discipline

Expect questions on how operational risk capital charges are calculated and the criteria for the Standardised Approach versus Advanced Measurement Approaches (AMA).

2. Risk Assessment and Mitigation

You will be tested on the tools used to identify and assess operational risk. Familiarize yourself with:

Risk Registers: Central databases of all identified risks.
Key Risk Indicators (KRIs): Metrics used to signal changes in the risk profile.
Scenario Analysis: Evaluating the impact of extreme but plausible events.

Interactive Playground

Explore our interactive learning tools below

Sample Question 1 of 4

A firm launches a complex mortgage product. Despite knowing it is only suitable for high-net-worth investors with a high risk tolerance, the marketing team aggressively sells it to low-income retail consumers without clearly explaining the risks, leading to severe financial losses for the customers. This scenario is a prime example of a failure in managing which type of risk, closely linked to the FCA's FTOC initiative?

This is just a taste — the full course includes far more

3. Cyber Security

As cyber threats become more sophisticated, regulators are placing greater emphasis on IT security and data protection. You should understand the principles of the General Data Protection Regulation (GDPR), the role of the Chief Information Security Officer (CISO), and common cyber threats like phishing, ransomware, and DDoS attacks.

Preparation Strategies

Start with the Official Workbook

The CISI official workbook is your primary resource. Ensure you read it thoroughly, taking notes on key definitions, regulatory bodies, and formulas. The exam questions are drawn directly from this text.

Practice with Realistic Mock Exams

Knowledge alone isn’t enough; you must be able to apply it under time pressure. Use mock exams to identify your weak areas and get comfortable with the format of the questions. Our platform provides unlimited mock exams that dynamically adapt to your performance.

Utilise Flashcards for Key Terms

Operational risk involves a lot of terminology and acronyms (e.g., KRI, RCSA, BCBS). Flashcards are an excellent tool for rapid recall and spaced repetition. Ensure you are familiar with all definitions, as the exam often uses precise language.

Conclusion

Passing the CISI Operational Risk exam requires a solid understanding of both the theoretical frameworks and the practical applications of risk management. By dedicating sufficient time to study, utilizing mock exams, and focusing on the core syllabus areas, you will be well on your way to achieving this valuable certification.