Financial Risk Manager Part 1

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Explanation:

Correct answer: C. Excessive reliance on external liquidity tends to promote adverse selection by bad agents

This is the statement that is not a standard lesson learned from CCP failures.

The recognized lessons include:

A: Operational risk should be tightly controlled.
B: Variation margin should be updated frequently and collected promptly to reduce uncollateralized exposure.
D: Initial margin and default funds must be robust enough to absorb severe market shocks and gaps.

Option C does not fit the usual CCP failure lessons and is the exception.

Explanation:

Correct answer: C. Excessive reliance on external liquidity tends to promote adverse selection by bad agents

This is the statement that is not a standard lesson learned from CCP failures.

The recognized lessons include:

A: Operational risk should be tightly controlled.
B: Variation margin should be updated frequently and collected promptly to reduce uncollateralized exposure.
D: Initial margin and default funds must be robust enough to absorb severe market shocks and gaps.

Option C does not fit the usual CCP failure lessons and is the exception.

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MManit

Last updated: April 18, 2026 at 11:32

Operational risk must be controlled as much as possible

50.0%

Variation margins should be recalculated frequently and collected promptly

25.0%

Excessive reliance on external liquidity tends to promote adverse selection by bad agents

25.0%

Initial margin and default funds should be resilient to large negative asset shocks or gaps