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      Question

      Errors in reconciliation and settlement in back office

      mainly lead to:
      A Credit risk Correct Answer Incorrect Answer
      B Market risk Correct Answer Incorrect Answer
      C Operational risk Correct Answer Incorrect Answer
      D Liquidity risk Correct Answer Incorrect Answer
      E Interest rate risk Correct Answer Incorrect Answer

      Solution

      Operational Risk:  According to the Basel Committee on Banking Supervision, this is the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events. Reconciliation and settlement are key internal processes; failures here (such as incorrect data entry, missed transactions, or system errors) fall directly under this category.

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