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FRM Part I · FRM Exam Part I · Principles for Effective Data Aggregation and Risk Reporting

A bank's risk data are drawn from several legacy systems with different counterparty identifiers, so exposures to the same corporate group cannot be combined without manual reconciliation. Which data aggregation principle is most directly weakened?

The data architecture and IT infrastructure principle is most directly weakened. Fragmented legacy systems with inconsistent counterparty identifiers prevent integrated aggregation of exposures across the group. Manual reconciliation is a symptom, so the structural weakness in architecture and data taxonomy is the root cause.

  1. AAdaptability, because the bank cannot produce ad hoc requests
  2. BAccuracy and integrity, because manual reconciliation alone is the weakness
  3. CCompleteness, because the bank lacks any risk data
  4. DData architecture and IT infrastructure, because inconsistent identifiers and fragmented systems impede integrated aggregationCorrect

Explanation

Inconsistent identifiers across systems reflect a weak integrated data taxonomy and architecture. The core problem is structural, which the data architecture and IT infrastructure principle covers. Accuracy is a consequence but not the root issue, and the bank does have data, so completeness is not the main issue.

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