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FRM Part II · FRM Exam Part II · Risk Reporting

A bank's operational risk reporting policy requires a full review of reports whenever a trigger occurs, in addition to the annual review. Which of the following is the least appropriate trigger?

A single recipient's preference on chart colors is the least appropriate trigger, since it is a minor matter with no effect on the report's usefulness. Business changes, new regulation and losses that reports failed to flag are material reasons to review the content off-cycle.

  1. AA significant change in the bank's business model or the launch of a major new product
  2. BA new regulatory requirement affecting the content of disclosures
  3. CA single recipient asking for a different color scheme in the charts, with no usability issue raised by othersCorrect
  4. DA major loss event revealing that existing reports failed to flag the underlying risk

Explanation

Triggers for off-cycle review should be material: business changes, regulation and evidence that the reports missed a risk. A personal aesthetic preference is a minor request that can be handled through normal feedback and does not justify a formal review. The loss event that went unflagged directly questions the report's effectiveness.

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