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FRM Part II · FRM Exam Part II · Case Study: Third-party Risk Management

A bank's outsourced call-centre vendor has an SLA requiring 99.5% availability over a 30-day month (720 hours). In the month, the vendor recorded 5.4 hours of downtime. Which statement is correct?

Availability was 99.25%, below the 99.5% target, so the SLA was breached. Allowed downtime is 3.6 hours (0.5% of 720), and actual downtime of 5.4 hours equals 0.75% of the month, leaving 99.25% availability.

  1. AAvailability was about 99.25%, so the SLA was breached
  2. BAvailability was 99.75%, so the SLA was metCorrect
  3. CAvailability was 99.25%, so the SLA was met
  4. DAvailability was 99.75%, so the SLA was breached

Explanation

Allowed downtime at 99.5% is 0.5% x 720 = 3.6 hours. Actual downtime of 5.4 hours gives availability of 1 - 5.4/720 = 1 - 0.0075 = 99.25%. That is below 99.5%, so the SLA was breached. Hence the first option is wrong in label order; check carefully: 99.25% with breach is the first option.

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