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

A G-SIB's internal audit review of BCBS 239 compliance finds the following: (i) the board has approved a risk data framework, (ii) the aggregation process was validated only by the team that built it, (iii) a documented data taxonomy exists, (iv) a key business line is exempted from group aggregation because its systems are costly to integrate. Which finding(s) most clearly conflict with the BCBS 239 governance and infrastructure principles?

Findings (ii) and (iv) conflict with the principles. Validation only by the builders is not independent, as Principle 1 requires. Excluding a business line merely for integration cost leaves material risk data uncovered, against the infrastructure and scope expectations. A board-approved framework and documented taxonomy are consistent.

  1. A(ii) and (iv) onlyCorrect
  2. B(i) and (iii) only
  3. C(i) only
  4. D(iii) only

Explanation

Principle 1 requires independent validation, so self-validation by the builders (ii) conflicts. Principle 2 and the scope of the standard require coverage of all material risk data; cost-based exclusion of a business line (iv) conflicts, since any non-coverage should be justified by materiality, not cost. A board-approved framework (i) and documented taxonomy (iii) are consistent with the principles.

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