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FRM Part I · FRM Exam Part I · Principles for Effective Data Aggregation and Risk Reporting

A bank's data architecture review notes the following: (i) risk data taxonomies differ between the credit and market risk units; (ii) data ownership for critical risk data is not assigned; (iii) the bank can reconcile risk data to accounting data monthly. Under BCBS 239 data architecture and IT infrastructure expectations, which conclusion is most appropriate?

Items (i) and (ii) are weaknesses, while (iii) is good practice. BCBS 239 expects integrated data taxonomies, clear ownership of data and architecture, and reconciliation of risk data to sources like accounting data. Differing taxonomies and unassigned ownership undermine aggregation, but reconciliation supports accuracy.

  1. AItems (i) and (ii) are weaknesses, since the bank should have integrated data taxonomies and defined ownership of data and architecture, while (iii) is consistent with good practiceCorrect
  2. BAll three items are weaknesses, since reconciliation to accounting data is discouraged
  3. COnly item (iii) is a weakness, since reconciliation should never be performed
  4. DNone of the items is relevant, since BCBS 239 addresses only report content

Explanation

BCBS 239 expects integrated data taxonomies and architecture across the banking group, and ownership of data and systems by the business and IT. Reconciling risk data to accounting data supports accuracy and is positive. So (i) and (ii) are weaknesses and (iii) is good practice.

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