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

A bank's risk reports are prepared monthly. During a market stress event, the board cannot obtain updated exposure figures for several days. Which BCBS 239 risk reporting practice is most directly violated?

The frequency practice is violated. BCBS 239 expects banks to produce risk reports at a frequency matching the needs of recipients and the risk type, and to be able to generate them more often during stress or crisis. Being unable to update exposures for days breaches this.

  1. AComprehensiveness
  2. BFrequencyCorrect
  3. CDistribution
  4. DClarity and usefulness

Explanation

The frequency principle requires that the board and senior management set the frequency of reporting, and that the bank be able to produce reports more often in times of stress or crisis. A monthly-only cycle that cannot be accelerated violates this. Distribution concerns getting reports to the right people securely, not how often reports are produced.

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