FRM Part I · FRM Exam Part I · Principles for Effective Data Aggregation and Risk Reporting
A bank wants to meet the adaptability principle for risk data aggregation. Which capability best demonstrates this?
The best demonstration is generating aggregate risk data flexibly, for example by country, industry or legal entity, to meet ad hoc requests and changing needs. Fixed monthly reports, reduced stress reporting or restricted access do not show the flexibility that the adaptability principle requires.
- AProducing the same fixed report each month with identical layout
- BGenerating aggregate data on a flexible basis, such as by country or industry, to meet ad hoc requests and changing needsCorrect
- CReducing the frequency of reporting during stress to save resources
- DLimiting data access to a single risk department
Explanation
Adaptability means the bank can produce aggregate risk data on a flexible, ad hoc basis, for example by sector, region or legal entity, and can incorporate new developments or regulatory requests. Fixed reports, reduced frequency and restricted access do not provide this flexibility.
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