Which type of risk is involved when a computer crash prevents the transmission of origination files?

Which type of risk is involved when a computer crash prevents the transmission of origination files?

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

Answer: (A)

The type of risk involved when a computer crash prevents the transmission of origination files is operating risk. Operating risk arises from the potential failure of internal processes, systems, or external events that disrupt normal business operations. In the context of a computer crash affecting the transmission of data, it highlights the vulnerabilities in the operational systems that manage electronic transactions and data flows. Operating risk encompasses a range of issues, including technology failures, human errors, and procedural breakdowns. A computer crash directly impacts the ability to carry out transactions, which is a core operational activity in ACH processing. Ensuring robust technological infrastructure and contingency plans is essential in managing this risk to maintain business continuity and effective transaction processing. The other types of risk mentioned—credit risk, fraud risk, and systemic risk—do not specifically relate to the operational aspects affected by a computer crash. Credit risk pertains to the possibility of loss due to a borrower's failure to repay a loan or meet contractual obligations. Fraud risk involves the potential for loss resulting from dishonest actions by employees or external parties. Systemic risk refers to the potential for a failure in the financial system as a whole, often triggered by interconnected issues within financial institutions, rather than a specific operational failure.

The type of risk involved when a computer crash prevents the transmission of origination files is operating risk. Operating risk arises from the potential failure of internal processes, systems, or external events that disrupt normal business operations. In the context of a computer crash affecting the transmission of data, it highlights the vulnerabilities in the operational systems that manage electronic transactions and data flows.

Operating risk encompasses a range of issues, including technology failures, human errors, and procedural breakdowns. A computer crash directly impacts the ability to carry out transactions, which is a core operational activity in ACH processing. Ensuring robust technological infrastructure and contingency plans is essential in managing this risk to maintain business continuity and effective transaction processing.

The other types of risk mentioned—credit risk, fraud risk, and systemic risk—do not specifically relate to the operational aspects affected by a computer crash. Credit risk pertains to the possibility of loss due to a borrower's failure to repay a loan or meet contractual obligations. Fraud risk involves the potential for loss resulting from dishonest actions by employees or external parties. Systemic risk refers to the potential for a failure in the financial system as a whole, often triggered by interconnected issues within financial institutions, rather than a specific operational failure.