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Answer: Hindsight bias risk implied by increased transparency of network interconnectedness
**Correct answer: B. Hindsight bias risk implied by increased transparency of network interconnectedness** This is **not** commonly identified as a standard CCP risk. The other choices are well-recognized CCP risks: - **A**: Reputational risk can arise when a CCP has to handle a member default. - **C**: CCPs face liquidity risk because they must meet variation margin obligations and maintain liquid resources. - **D**: A member default can trigger knock-on effects such as failed auctions and broader disruption. So the exception is **B**.
Author: Manit Arora
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Q-605.2. Each of the following is a risk faced by central counterparties (CCPs) EXCEPT which is not?
A
Reputational risk associated with remedying a clearing member default
B
Hindsight bias risk implied by increased transparency of network interconnectedness
C
Liquidity risk due to variation margin, investment of financial resources, and liquidity support
D
Knock-on effects ensuing from the default of a clearing member including failed auctions and resignations
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