FRM Part II · FRM Exam Part II · Risk Identification
A bank plans to migrate its payments platform to a new vendor system over six months. The operational risk function is asked to apply good practice for identifying risks arising from change. Which action is MOST appropriate?
The bank should assess the change's risks before approval and implementation, covering processes, people, systems and third parties, and keep updating the assessment as the project progresses. Waiting for post-launch losses is reactive, and relying on the vendor alone leaves the bank's own accountability unaddressed.
- AAssess risks only after go-live, when actual loss events provide objective data
- BPerform a risk assessment of the change before approval and implementation, covering process, people, systems and third-party impacts, and update it as the project evolvesCorrect
- CLimit the review to IT risks because change programs do not affect other risk categories
- DRely on the vendor's own risk assessment as sufficient evidence of control adequacy
Explanation
Sound practice requires identifying risks prospectively, before change is approved and implemented, across all affected dimensions, and revisiting the assessment as the project develops. Waiting for losses is reactive, limiting to IT ignores process and people effects, and relying on the vendor abandons the bank's own accountability.
Did you get it right without looking?
One question tells you little. A timed set on Risk Identification shows your real accuracy, how long you take and where you lose marks.
More Risk Identification questions
- An analyst reviews an internal loss event database and finds that it contains only events above a USD 50,000 collection threshold. Which is …
- A bank's payments division is preparing to run its first Risk and Control Self-Assessment (RCSA). The operational risk function wants the ex…
- A bank's horizon scanning exercise highlights that a rapidly growing fintech partner may become a critical dependency for its customer onboa…
- A bank runs scenario workshops and finds that participants anchor on the first loss estimate offered by a senior executive, and that estimat…
- A bank is about to migrate its payments platform to a new vendor system. Which approach best reflects sound operational risk identification …
- During an RCSA workshop, a trading operations manager rates the residual risk of trade settlement failures as 'low' because 'the reconciliat…