FRM Part II · FRM Exam Part II · Risk Reporting
A bank's head of operational risk wants to confirm that the board risk report is effective after distribution. Which action best reflects good practice for reviewing report effectiveness?
The best approach is to monitor whether recipients act on the report in a timely way and gather their feedback to refine it. Effectiveness is judged by usefulness for decisions, not by volume of reports issued, self-approval by preparers or cosmetic formatting changes.
- ACount the number of reports issued each year
- BTrack whether recipients take timely decisions and actions on report content, and collect their feedback to refine content and formatCorrect
- CHave the report preparers approve their own reports
- DIncrease font size and add color coding to all tables
Explanation
Effectiveness depends on whether reports are understood and drive action. Following up on decisions and obtaining recipient feedback addresses this. Counting reports measures output, self-approval lacks independence, and formatting changes do not test usefulness.
Did you get it right without looking?
One question tells you little. A timed set on Risk Reporting shows your real accuracy, how long you take and where you lose marks.
More Risk Reporting questions
- An internal audit review of a bank's operational risk reports finds that the format has not changed in six years, several metrics are no lon…
- Which feature of an operational risk report is most important for ensuring that it supports timely decision making by senior management?
- A payments bank sets a tolerance of 30 minutes for the maximum tolerable disruption of its card authorisation service. During a test, the fa…
- A bank's monthly operational risk report to executive management contains 40 KRIs. Analysis shows 28 have been green for over two years, 8 a…
- Which feature of risk reporting data is most directly addressed by requiring that operational risk reports be produced from a single, reconc…
- A bank's operational risk function prepares a monthly report for the board risk committee. Which feature would most improve the usefulness o…