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

A bank's home supervisor finds that the bank's risk reports are weak in a foreign subsidiary's jurisdiction, where the host supervisor has also noted data deficiencies. Which action is most consistent with BCBS 239 Principle 14 on home/host cooperation?

Home and host supervisors should cooperate and share appropriate information so that review of the principles and any remedial action are coordinated, within legal and confidentiality limits. Acting separately or exempting the subsidiary from review contradicts Principle 14 on cross-border supervisory cooperation.

  1. AThe home supervisor should ignore the host supervisor because only the consolidated group matters
  2. BThe host supervisor should impose its own remedial plan without sharing findings, to avoid duplicating work
  3. CThe supervisors should cooperate and share appropriate information so that remedial action is consistent and coordinated, subject to legal and confidentiality constraintsCorrect
  4. DThe group should be required to report only to the home supervisor, and the subsidiary exempted from review

Explanation

Principle 14 says supervisors should cooperate with relevant supervisors in other jurisdictions on the supervision and review of the principles and the implementation of any remedial action. Sharing information is expected, subject to legal limits. Acting in isolation or exempting the subsidiary contradicts this cooperative approach.

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