Financial Risk Manager Part 2
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A bank owned five retail branch buildings that were destroyed in a hurricane. Several months later, the bank received a settlement payment from its insurance company that covered a portion of the value of the buildings. A risk manager is preparing an operational risk incident report of this loss for the national regulator and wants to ensure that all the appropriate costs are included in the report and that the reporting process meets best industry practices. Which of the following statements correctly describes how the losses from this event should be reported?
A
The report should include the gross loss incurred as a result of the event, but not the settlement payment received from the insurance company.
B
The reported loss should include an estimate of the opportunity costs of banking business lost at the affected branches.
C
The reported loss should include the legal costs paid to obtain construction permits to rebuild the destroyed branch buildings.
D
The losses should be reported as a market risk event rather than an operational risk event because they resulted in a reduction of the value of the bank's real estate portfolio.