FRM Part I · FRM Exam Part I · Operational Risk
A bank's operational risk team asks each business line manager to score the likelihood and impact of identified risks, then discuss the scores in a workshop, and finally record the results in the bank's risk register. Which tool is being used?
The tool is risk and control self-assessment. In an RCSA, business line managers identify and score the likelihood and impact of risks and evaluate controls, usually in workshops, and the results are recorded in a risk register for management and oversight use.
- ARisk and control self-assessment (RCSA)Correct
- BBacktesting of a loss distribution approach model
- CScenario analysis based on external loss data
- DKey risk indicator threshold calibration
Explanation
RCSA has business units themselves identify and assess their risks and the effectiveness of controls, typically through workshops or questionnaires. Scenario analysis instead builds hypothetical severe events, and KRI calibration concerns metric thresholds, not scoring of risks by managers.
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