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

A bank's internal audit reviews its risk reporting. It finds that reports are accurate and timely, but that ad hoc requests from the board for new breakdowns, such as exposure by country after a geopolitical event, take weeks to fulfil because reports are built from rigid, manual templates. Which conclusion is most consistent with BCBS 239?

The bank is weak on adaptability. BCBS 239 expects banks to produce ad hoc, customised reports across different dimensions, such as by country, to meet changing board and supervisory needs, especially under stress. Rigid manual templates that take weeks to adjust show this gap, even though routine reports are accurate and timely.

  1. AThe bank is compliant because routine reports are accurate and timely
  2. BThe bank has a weakness in the adaptability of its reporting, as it must be able to produce ad hoc reports on request across different dimensionsCorrect
  3. CThe bank has a weakness only in distribution, since the board is a recipient
  4. DThe bank should reduce the frequency of routine reports to free capacity

Explanation

BCBS 239 calls for flexibility in risk data aggregation and reporting: banks should generate ad hoc reports meeting demands in stress or for changing supervisory and internal needs. Rigid manual templates delaying new breakdowns indicate weak adaptability. Accuracy and timeliness of routine reports do not make the bank compliant in this respect.

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