Jennifer Durant is evaluating the existing risk management system of Silverman Asset Management. She is asked to match the following events to the corresponding type of risk. Identify each numbered event as a market risk, credit risk, operational risk, or legal risk event.

Event:

1.Insufficient training leads to misuse of order management system.

2.Credit spreads widen following recent bankruptcies.

3.Option writer does not have the resources required to honor a contract.

4.Credit swaps with counterparty cannot be netted because they originated in multiple jurisdictions.

A. 1: legal risk, 2: credit risk, 3: operational risk, 4: credit risk

B. 1: Operational risk, 2: credit risk, 3: operational risk, 4: legal risk

C. 1: Operational risk, 2: market risk, 3: credit risk, 4: legal risk

D. 1: Operational risk, 2: market risk, 3: operational risk, 4: legal risk