Every exam problem has used the default value of 0.5 but the OSFI.MCT source text labels the correlation for diversification as R. That makes me think it doesn't always have to be 0.5, which is why in the web-based problem in quiz 1, I made it a variable.
Are you referring to the formula for operational risk? If so, I recommend memorizing this formula and all the risk factors. If you look further down in the examiner's report, they say that a common error was not knowing the risk factors in that formula. (It does seem a little unfair to ask you to memorize those factors, but that's apparently what is required.)
Comments
Every exam problem has used the default value of 0.5 but the OSFI.MCT source text labels the correlation for diversification as R. That makes me think it doesn't always have to be 0.5, which is why in the web-based problem in quiz 1, I made it a variable.
Are we supposed to memorize the risk factor for DWP/AWP/CWP or they will be given?
Are you referring to the formula for operational risk? If so, I recommend memorizing this formula and all the risk factors. If you look further down in the examiner's report, they say that a common error was not knowing the risk factors in that formula. (It does seem a little unfair to ask you to memorize those factors, but that's apparently what is required.)