RMIA CPRM Practice Questions - RMIA Certified Practising Risk Manager (CPRM) Exam

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When designing a Risk Appetite Statement (RAS) for an ASX-listed financial services provider, which metric is most appropriate for defining risk tolerance for capital adequacy?

A qualitative policy statement declaring zero tolerance for regulatory breaches. The historical standard deviation of quarterly net interest margin (NIM) over a five-year period. The total annual premium budget allocated for Directors and Officers (D&O) liability insurance. A minimum Common Equity Tier 1 (CET1) ratio threshold above the APRA regulatory minimum, including a specified management buffer.

Correct Answer:

A minimum Common Equity Tier 1 (CET1) ratio threshold above the APRA regulatory minimum, including a specified management buffer.

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