FRM Part II · FRM Exam Part II · Risk Reporting
A bank sets a tolerance for its payments service of a maximum tolerable disruption of 4 hours. After a vendor outage, the service was unavailable for 6 hours. The operational resilience dashboard shows this service as 'green' because the bank's quarterly service availability was 99.9%. What is the most appropriate criticism of the dashboard?
The dashboard is flawed because an aggregate availability percentage can hide a single disruption that exceeds the impact tolerance. Resilience reporting should show breaches of the maximum tolerable disruption directly, since tolerance applies to each disruption rather than to an average over a quarter.
- AThe availability percentage is an average measure that can mask a single breach of the impact tolerance, so the report should show tolerance breaches directlyCorrect
- BThe dashboard should have used a higher availability figure such as 99.99% to be considered valid
- CImpact tolerances should be reported only after the regulator has reviewed them
- DA six-hour outage is acceptable because availability exceeded 99%
Explanation
Impact tolerance is set per disruption, not as an average over a period. A quarter has about 2,184 hours, so 6 hours of downtime is roughly 0.27% and the figure of 99.9% would not even reconcile, but regardless, averages hide single events that breach tolerance. Resilience reporting should flag tolerance breaches explicitly. The 99%-based argument confuses long-run availability with tolerance for a single event.
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