What type of risk is associated with an Originator's payroll being accidentally deleted by an ODFI employee?

What type of risk is associated with an Originator's payroll being accidentally deleted by an ODFI employee?

• A. Operational Risk
• B. Credit Risk
• C. Fraud Risk
• D. Systemic Risk

Answer: (A)

Operational risk is the correct choice in this scenario because it specifically pertains to losses resulting from inadequate or failed internal processes, systems, or external events. In the case of an Originator's payroll being accidentally deleted by an ODFI employee, it reflects a failure in operational processes due to human error. This type of risk encompasses a wide range of potential issues, including mistakes in handling data, problems with system management, and issues arising from external factors that disrupt normal operations. The other types of risks do not apply as closely to this situation. Credit risk relates to the potential for loss due to a borrower failing to meet their financial obligations, which is not relevant in this case. Fraud risk involves the possibility of losses from fraudulent activities or deceitful behaviors, which isn't applicable here since the accident was unintentional rather than malicious. Systemic risk refers to the likelihood of a collapse in an entire financial system or market, usually due to interconnectedness among financial institutions, and is not relevant to a single incident of accidental data deletion. Thus, operational risk is the most fitting term for the situation described.

Operational risk is the correct choice in this scenario because it specifically pertains to losses resulting from inadequate or failed internal processes, systems, or external events. In the case of an Originator's payroll being accidentally deleted by an ODFI employee, it reflects a failure in operational processes due to human error. This type of risk encompasses a wide range of potential issues, including mistakes in handling data, problems with system management, and issues arising from external factors that disrupt normal operations.

The other types of risks do not apply as closely to this situation. Credit risk relates to the potential for loss due to a borrower failing to meet their financial obligations, which is not relevant in this case. Fraud risk involves the possibility of losses from fraudulent activities or deceitful behaviors, which isn't applicable here since the accident was unintentional rather than malicious. Systemic risk refers to the likelihood of a collapse in an entire financial system or market, usually due to interconnectedness among financial institutions, and is not relevant to a single incident of accidental data deletion. Thus, operational risk is the most fitting term for the situation described.