FRM Part II · FRM Exam Part II · Risk Mitigation
A bank's payments platform supports a critical business service. Management sets a statement of the maximum disruption it is willing to tolerate for that service, expressed as a time limit and a volume or quality measure, before intolerable harm occurs to customers or market integrity. Which term best describes this statement?
The statement describes an impact tolerance: the maximum disruption a firm will accept for a critical business service, defined by time and other measures, before intolerable harm arises. It is service-level, unlike a system-level recovery time objective, which covers only a supporting component.
- ARecovery time objective for the supporting server
- BImpact tolerance for the critical serviceCorrect
- CRisk appetite for credit losses
- DKey risk indicator threshold for staff turnover
Explanation
Impact tolerance is set at the level of an important business service and defines the maximum tolerable disruption. A recovery time objective applies to a specific system or process, not to the end-to-end service outcome. Credit risk appetite and staff turnover thresholds are unrelated to service disruption limits.
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