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

A bank's data governance review finds: (i) risk data taxonomies differ across subsidiaries; (ii) the group's critical risk data is not mapped to an owner; (iii) a stress-time report takes 5 days instead of the 2 days management set as the internal target; (iv) the top-level risk report omits an immaterial subsidiary excluded by a documented, board-approved policy. Which finding does NOT indicate a BCBS 239 shortfall by itself?

Finding (iv) is not itself a shortfall. BCBS 239 targets material risks, so excluding an immaterial subsidiary under a documented, board-approved policy can be acceptable. Inconsistent taxonomies, unowned critical data and missing the bank's own stress timeliness target all indicate weaknesses.

  1. AFinding (i), as inconsistent taxonomies weaken integrated data architecture
  2. BFinding (iv), as documented and approved exclusions of immaterial entities can be consistent with the principlesCorrect
  3. CFinding (iii), as the timeliness principle is breached when the internal target is missed
  4. DFinding (ii), as ownership of critical data is part of governance

Explanation

BCBS 239 expects coverage of all material risk exposures; an immaterial entity excluded under a documented, approved policy is not a breach, and the bank should explain the exclusion. Inconsistent taxonomies, missing data ownership and missing the bank's own timeliness target are each weaknesses in architecture, governance and timeliness.

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