One of the Reasons for the Development of Internal Risk

question 82

True/False

One of the reasons for the development of internal risk measurement models is the proposal of the BIS to impose capital requirements on the trading portfolios of FIs.

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Definitions:

Hindsight Bias

Hindsight bias refers to the common tendency to believe, after an event has occurred, that one would have predicted or expected the outcome.

Interpretation of the Past

The process of understanding and explaining historical events, contributions, or phenomena.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, often referred to as the "I-knew-it-all-along effect."

"I Knew It All Along"

The phenomenon where people believe they predicted an outcome that could not have been reasonably foreseen; also known as hindsight bias.