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FRM Part II · FRM Exam Part II · Contingency Funding Planning

A bank's CFP has detailed stress scenarios and a list of contingent funding sources, but it does not name who convenes the crisis team, who authorizes asset sales, or who communicates with regulators and creditors. Which key CFP component is most clearly missing?

The missing component is a governance and escalation structure with clearly assigned roles and responsibilities. A CFP must specify who convenes the crisis team, who authorizes actions such as asset sales, and who communicates with regulators and counterparties, otherwise response in a stress event will be slow and uncoordinated.

  1. AQuantitative liquidity coverage ratio calculation
  2. BGovernance and escalation structure with defined roles and responsibilitiesCorrect
  3. CTransfer pricing methodology for business lines
  4. DHedging strategy for interest rate risk in the banking book

Explanation

The gap is about who decides and acts: crisis team formation, authorization and communication. These belong to the CFP's governance, roles and escalation procedures. The other options are valid risk topics but do not address the omitted decision authority.

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