FRM Part II · FRM Exam Part II · Risk Reporting
A bank's risk report to senior management aggregates operational loss data across business lines. Which feature would most undermine the reliability of the report's content?
Inconsistent loss event definitions and capture thresholds across business lines most undermine reliability, because aggregated figures would not be comparable or complete. Consistent data quality and definitions are a prerequisite for meaningful risk reports; commentary, source labelling and emerging-risk sections strengthen rather than weaken them.
- AInclusion of both quantitative metrics and qualitative commentary
- BInconsistent loss event definitions and data capture thresholds across business linesCorrect
- CReporting results with a clear data source and date
- DIncluding a section on emerging risks
Explanation
Aggregation requires consistent definitions and thresholds; otherwise figures are not comparable and totals mislead. The other features improve transparency and completeness.
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