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FRM Part II · FRM Exam Part II · Introduction to Operational Risk and Resilience

A bank maps the resources behind its payments service, identifying people, processes, technology, facilities and third parties. What is the main purpose of this mapping in an operational resilience framework?

Mapping the people, processes, technology, facilities and third parties behind a critical operation reveals interdependencies and single points of failure. This lets the bank identify vulnerabilities and focus testing and mitigation, rather than calculating capital or allocating costs.

  1. ATo compute the Pillar 1 operational risk capital charge
  2. BTo identify interconnections and dependencies, and so vulnerabilities, that could undermine delivery of the critical operationCorrect
  3. CTo allocate costs among business lines
  4. DTo replace scenario testing with a static inventory

Explanation

Mapping interconnections and interdependencies reveals single points of failure and concentrations in the chain supporting a critical operation. It informs testing and investment but does not compute capital, allocate costs or substitute for scenario testing.

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