tep 1: Purpose of Internal Loss Investigations

Internal loss investigations analyze past loss events to identify root causes, improve controls, and

enhance risk assessments.

Step 2: Why Option A Is Correct

Root Cause Analysis: Identifying why the loss occurred.

Focus on Remediation: Implementing corrective measures to prevent recurrence.

Scenario Analysis Improvement: Using lessons learned to enhance risk scenario modeling.

Step 3: Why the Other Options Are Incorrect

Option B ("Focus on who caused the issue") → Incorrect because loss investigations are about

systemic issues, not assigning blame.

Option C ("Ascertain responsibility for the loss event") → Incorrect because the focus is on process

improvements, not individual accountability.

Option D ("Determined by HR on a case-by-case basis") → Incorrect because HR does not dictate risk

investigations—risk and compliance functions do.

PRMIA Risk Reference Used:

PRMIA Operational Risk Framework – Emphasizes loss investigations for systemic risk management.

Basel III Risk Governance Standards – Defines loss event analysis as a key risk management tool.