Skip to content

FRM Part II · FRM Exam Part II · Cyber-resilience: Range of Practices

A bank's risk committee notes that cyber risk differs from many other operational risks. Which feature most strongly supports treating cyber risk as a potential source of systemic risk across the financial sector?

Interconnectedness is the key driver. Shared technology vendors, networks and data mean a cyber incident at one institution or provider can quickly spread to others, creating systemic risk. Cyber threats are also evolving and often external, so they are neither easily isolated nor predictable.

  1. AInterconnectedness through shared technology providers, networks and data means an incident at one institution or vendor can spread to othersCorrect
  2. BCyber losses are always smaller than credit losses, so they can be aggregated simply
  3. CCyber threats arise only from within the institution, so they are easily isolated
  4. DCyber events occur at a stable, predictable frequency suitable for actuarial modelling

Explanation

Common dependencies and interconnections let a cyber event propagate quickly across firms, creating systemic potential. The other statements are incorrect: threats are often external and evolving, and frequency/severity are hard to model.

Did you get it right without looking?

One question tells you little. A timed set on Cyber-resilience: Range of Practices shows your real accuracy, how long you take and where you lose marks.

Practise Cyber-resilience: Range of PracticesFree diagnostic mock

More Cyber-resilience: Range of Practices questions