FRM Part II · FRM Exam Part II · Risk Reporting
A bank's operational risk function prepares a monthly report for the board risk committee. Which feature would most improve the usefulness of this report for the committee's oversight role?
The report is most useful when it shows key risk indicators against board-approved risk appetite thresholds, with trends and escalation status for breaches. This gives the committee forward-looking, decision-relevant information, unlike exhaustive event lists, technical logs or reports limited to booked losses.
- AListing every individual loss event below the reporting threshold in chronological order
- BPresenting key risk indicators against approved risk appetite thresholds, with trends and escalation status for breachesCorrect
- CIncluding detailed technical logs from each IT system incident
- DLimiting content to losses already booked in the general ledger
Explanation
Board-level reporting should be concise, forward-looking and tied to risk appetite, showing indicators versus thresholds, trends and escalation. Exhaustive event lists and technical logs bury key messages. Reporting only booked losses is backward-looking and omits near misses and emerging risks.
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