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FRM Part II · FRM Exam Part II · Case Study: Financial Crime and Fraud

A bank has 40 critical business services. After a payments fraud incident forced a systems shutdown, management sets an impact tolerance for the payment service of a maximum 4-hour disruption. Testing shows that a similar fraud-driven shutdown would take 6 hours to restore the service. Which conclusion and response is most appropriate?

The 6-hour restoration exceeds the 4-hour impact tolerance in a severe but plausible scenario, so the bank should remediate, for example through alternative processing or faster fraud isolation, and report the gap to the board. Tolerances should not be averaged or relaxed to pass tests.

  1. AThe bank is within tolerance because average disruption across all 40 services is below 4 hours
  2. BThe tolerance should be raised to 6 hours so that the test result passes
  3. CThe tolerance is breached in a severe but plausible scenario, so management should invest in remediation such as alternative processing or faster fraud isolation, and report the gap to the boardCorrect
  4. DImpact tolerance applies only to actual incidents, so test results need no action

Explanation

Impact tolerance is a per-service limit tested against severe but plausible scenarios. A 6-hour restoration exceeds 4 hours, so remediation and board reporting are needed. Averaging across services or loosening the tolerance to fit results defeats its purpose.

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