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FRM Part II · FRM Exam Part II · Introduction to Operational Risk and Resilience

A payments firm identifies its retail payment processing service as critical. Management states that the maximum tolerable outage is 4 hours before unacceptable harm to customers and market integrity. During a scenario test, the service is restored after 6 hours. Which conclusion is most appropriate?

The firm breached its 4-hour impact tolerance because restoration took 6 hours. It should analyze the vulnerabilities exposed by the test and remediate them, rather than loosening the tolerance to fit the result. Eventual recovery does not mean the tolerance was respected.

  1. AThe firm remained within tolerance because the service was eventually restored
  2. BThe impact tolerance was breached, so the firm should analyze the vulnerabilities and invest in remediationCorrect
  3. CThe tolerance should be extended to 6 hours to match the test result
  4. DThe test is invalid because scenario tests cannot breach tolerances

Explanation

Impact tolerance is the maximum disruption acceptable; 6 hours exceeds 4 hours, revealing a gap. The right response is to remediate, not to redefine the tolerance to fit the result. Restoration after the limit does not equal staying within it.

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