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FRM Part II · FRM Exam Part II · Digital Resilience and Financial Stability: The Quest for Policy Tools in the Financial Sector

A bank's resilience team sets an impact tolerance for its payments service. Which description correctly reflects how an impact tolerance is used within an operational resilience framework?

An impact tolerance is the maximum tolerable disruption to a critical service, often expressed as a time limit, that a firm should remain within even under severe but plausible scenarios. It is not a loss forecast, capital charge or incident probability.

  1. AThe maximum tolerable level of disruption to a critical service, such as a time limit, that the firm should stay within even in severe but plausible scenariosCorrect
  2. BThe expected annual loss from cyber incidents, used to set insurance premiums
  3. CThe amount of capital required to cover operational losses at the 99.9% confidence level
  4. DThe probability that a cyber incident will occur in a given year

Explanation

Impact tolerance expresses the maximum tolerable disruption (for example, duration or harm) for an important service, and firms test whether they can remain within it under severe but plausible scenarios. It is not a loss estimate, a capital figure or a likelihood measure.

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