Which one of the following four statements presents a challenge of using external loss databases in the operational risk framework?

Which one of the following four statements presents a challenge of using external loss databases in the operational risk framework?
A . Use of benchmarked data reflects similar data collection standards.
B . External events are usually not of interest to senior management.
C . If the external data is gathered from news sources, it may only reflect events that are interesting to the press.
D . They provide a source of data on what operational loss events will occur.

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Answer: C

Explanation:

Option A: Use of benchmarked data reflects similar data collection standards.

Incorrect. Benchmarking ensures that data is collected using similar standards, enhancing comparability and reliability.

Option B: External events are usually not of interest to senior management.

Incorrect. External events provide valuable insights and lessons that are often of significant interest to senior management.

Option C: If the external data is gathered from news sources, it may only reflect events that are interesting to the press.

Verified and correct. Data sourced from news can be biased towards more sensational events, potentially missing out on less newsworthy but equally important incidents.

Option D: They provide a source of data on what operational loss events will occur.

Incorrect. External databases provide historical data that can inform risk assessments but do not predict future events directly.