Explanation:
An inappropriate choice of acquisition target is an example of strategic risk—loss arising from a poor strategic business decision. Strategic risk is specifically excluded from the definition of operational risk. Tax evasion is an example of internal fraud. Employee discrimination is an example of ineffective employment practices and workplace safety. Natural disasters are an example of damage to physical assets.
(Book 4, Module 53.1, LO 53.a)
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Question 9
Which of the following items would not fall within any one of the official Basel II defined event types regarding operational risk according to the Basel Committee on Banking Supervision?
A
Criminal liability arising from tax evasion.
B
Legal liability arising from employee discrimination.
C
Damage arising from natural disasters.
D
Loss arising from an inappropriate choice of acquisition target.
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