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FRM Part II · FRM Exam Part II · Case Study: Third-party Risk Management

A bank's board wants to reduce cloud concentration risk for a critical payment service. The service must resume within 2 hours of a provider failure. Which strategy most credibly supports that objective?

A tested exit and portability plan with a pre-configured standby environment at an alternate provider best supports a two-hour recovery. It addresses provider-wide failure directly, whereas single-provider availability zones, liability exclusions or insurance do not restore the service in time.

  1. AObtain a contractual clause that excludes provider liability for outages
  2. BRely on the provider's availability zones within its single region only
  3. CMaintain a tested exit and portability plan with a pre-configured standby environment at an alternate providerCorrect
  4. DIncrease the provider's insurance coverage and review it annually

Explanation

A tested standby at another provider addresses provider-wide failure within the recovery time. Availability zones in one region do not protect against provider-level or control-plane failure. Liability clauses and insurance compensate losses but do not restore service in 2 hours.

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