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

A bank's board is reviewing its operational resilience approach. Which statement best reflects the core objective of operational resilience as described in supervisory principles such as the Basel Committee's Principles for Operational Resilience?

Operational resilience is the ability of a bank to deliver critical operations through disruption. It involves identifying threats, preparing, responding, recovering and learning, rather than assuming every disruption can be prevented, because some events are unavoidable.

  1. APreventing every possible disruption from ever occurring to critical operations
  2. BDelivering critical operations through disruption, by identifying, preparing for, responding to, recovering from and learning from eventsCorrect
  3. CHolding enough regulatory capital to absorb all operational losses
  4. DTransferring all disruption risk to third-party providers through contracts

Explanation

Operational resilience is the ability to deliver critical operations through disruption, accepting that not all disruptions can be prevented. Option A is wrong because it assumes prevention of all events is feasible. Capital and outsourcing do not by themselves ensure continued delivery of services.

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