Skip to content

FRM Part II · FRM Exam Part II · Introduction to Operational Risk and Resilience

A bank's operational resilience framework defines its critical operations. Which approach best reflects the usual operational resilience principle for identifying these critical operations?

Critical operations are identified by the harm their disruption would cause to the firm's viability, its customers and financial stability. Revenue ranking, loss history or in-house status are not the test, and outsourced services stay within the firm's accountability.

  1. ASelect the operations that generate the largest share of annual revenue, regardless of customer or market impact
  2. BIdentify the operations whose disruption would threaten the firm's viability, its customers, or the stability of the financial systemCorrect
  3. CSelect only the operations that are performed in-house, because outsourced services are the vendor's responsibility
  4. DSelect the operations that have experienced the most loss events in the past three years

Explanation

Operational resilience focuses on delivering critical operations through disruption. Criticality is judged by the impact of disruption on the firm's safety and soundness, its customers and wider financial stability. Revenue size or past loss frequency is not the test, and outsourced activities remain the firm's responsibility.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Operational Risk and Resilience shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Operational Risk and ResilienceFree diagnostic mock

More Introduction to Operational Risk and Resilience questions