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PRMIA Exam 8010 Topic 1 Question 17 Discussion

Actual exam question for PRMIA's Operational Risk Manager (ORM) Exam exam
Question #: 17
Topic #: 1
[All Operational Risk Manager (ORM) Exam Questions]

Which of the following measures can be used to reduce settlement risks:

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Suggested Answer: C

increasing the timing differences between the two legs of the transaction will increase settlement risk and not reduce it. Using escrow arrangements, such as central clearing houses to settle transactions (eg the DTCC in the United States) reduces settlement risk. Cash settlements based on netting arrangements reduce settlement risk, while physical delivery combined with gross cash payments increase it.

Therefore Choice 'a' is the correct answer.


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