Operational Risk, Controls and Reconciliations
This topic covers segregation of duties, supervisory controls, reconciliations, breaks, exception handling, customer protection, business continuity, vendor risk, and operational incidents.
How to study for Series 99
Treat each Series 99 item as an operations control workflow: verify authority, process accurately, reconcile breaks, preserve records, and escalate risk.
Core concepts
Concept 1
Operational Risk, Controls and Reconciliations questions test whether an operations professional can identify the correct operational control, processing step, record, or escalation path.
Exam cue: Identify whether the scenario involves account maintenance, money movement, settlement, processing, records, controls, or professional conduct.
Concept 2
The best Series 99 answer usually protects accurate account records, timely processing, reconciliation, supervision, customer protection, and regulatory reporting.
Exam cue: Match the answer to the operational evidence: authorization, documentation, comparison, reconciliation, reporting, supervision, or escalation.
Concept 3
Eliminate answers that bypass firm procedures, ignore exception reports, process incomplete instructions, or delay escalation of operational risk.
Exam cue: Prefer timely processing, complete records, segregation of duties, privacy, AML awareness, and exception follow-up.
Risk pitfalls and guardrails
Treating operations work as clerical when it creates customer protection, books and records, and supervisory risk.
Guardrail: Avoid answers that bypass documentation, ignore exception reports, disclose private information, or treat suspicious activity as routine processing.
Processing funds, securities, transfers, or corrections without required authority or documentation.
Guardrail: Avoid answers that bypass documentation, ignore exception reports, disclose private information, or treat suspicious activity as routine processing.
Ignoring red flags because the issue appears to be back-office or low-dollar.
Guardrail: Avoid answers that bypass documentation, ignore exception reports, disclose private information, or treat suspicious activity as routine processing.
Memory anchors
Segregation of Duties
Segregation of duties reduces risk by separating incompatible functions.
Reconciliation
Reconciliation compares internal and external records to identify breaks.
Break
A break is a mismatch between records that requires investigation and resolution.
Exception Handling
Exception handling documents review, escalation, correction, and supervisory disposition.
Customer Protection
Customer protection controls safeguard customer cash and securities.
Operational Incident
Operational incidents require timely assessment, containment, documentation, and escalation.
Business Continuity
Business continuity planning supports continued critical operations during disruptions.
Vendor Risk
Vendor risk controls monitor outsourced services that affect firm operations.
Access Control
Access controls limit systems and data to authorized users.
Supervisory Control
Supervisory controls test whether procedures are reasonably designed and followed.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
One employee can create a new payee, enter a payment, approve it, and clear the exception. Which control is weakest?
The firm's cash ledger differs from the bank statement by a deposit in transit. What should reconciliation do?
Answer all questions to submit.
Next step personalized recommendations
Continue learning
Move forward only after this module is stable.
What is Pass Harbor?
Completely free exam prep for 317 U.S. exams.
- Practice questions
- Flashcards
- Study guides
- Mock exams
- No registration
- No paywall
- Start instantly
“No more expensive exam prep. Quality study tools should be accessible to everyone.”