FRM Part II · FRM Exam Part II · Risk Reporting
A bank's operational risk team is redesigning its quarterly board risk report. Previously the report ran to 120 pages of detailed loss event listings. Directors say they cannot identify the key issues. Which design change is most consistent with good risk reporting practice?
The best change is a concise summary of key exposures, trends and decisions needed, with supporting detail in appendices or available on request. Board reports should be tailored to the audience and focus attention on material issues rather than overwhelming readers with volume.
- AAdd more loss event detail so the board has complete information
- BReplace the report with a monthly list of all control failures sorted by date
- CPresent a concise summary of key risk exposures, trends and required decisions, with detail available in appendices or on requestCorrect
- DRemove all forward-looking information because it cannot be verified
Explanation
Good risk reports are tailored to the audience, highlight the material risks, trends and actions needed, and avoid information overload. Detail can be supported through appendices. Adding more detail worsens the problem the directors raised.
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