FRM Part I · FRM Exam Part I · Principles for Effective Data Aggregation and Risk Reporting
A bank's board receives a monthly risk report that contains hundreds of pages of detailed position data but no summary of key exposures or emerging risks. Which BCBS 239 reporting principle is most directly violated?
The clarity and usefulness principle is violated. Reports should be understandable and comprehensive without being overloaded, offering summaries, key exposures and emerging risks tailored to the board's needs. Hundreds of pages of raw positions burden the reader and obscure the key messages, which is a clarity problem rather than frequency or distribution.
- AClarity and usefulnessCorrect
- BFrequency
- CDistribution
- DReview
Explanation
Clarity and usefulness requires reports to be easy to understand, comprehensive but not burdensome, and to include meaningful information tailored to the recipients' needs, such as summaries and emerging risks. A voluminous report with no summary fails this. Frequency concerns timing, distribution concerns who receives it, and review concerns validation of reports.
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