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FRM Part II · FRM Exam Part II · Digital Resilience and Financial Stability: The Quest for Policy Tools in the Financial Sector

A regional bank's risk committee is reviewing its approach to operational disruption from cyber incidents. Management proposes to shift focus from solely preventing cyberattacks to also ensuring that critical services can continue and recover quickly after a successful attack. Which concept best describes this broadened objective in the digital resilience literature?

Digital resilience is the correct concept. It covers not only preventing cyber incidents but also withstanding them, responding and recovering so critical services keep running. Pure cybersecurity hardening focuses on prevention only, so it does not capture the broader continuity and recovery objective.

  1. ADigital resilience, which emphasizes the ability to prevent, withstand, respond to and recover from disruptionsCorrect
  2. BCybersecurity hardening, which emphasizes only perimeter defenses against intrusion
  3. CCapital adequacy, which emphasizes absorbing credit losses through higher buffers
  4. DModel validation, which emphasizes independent testing of quantitative models

Explanation

Digital resilience goes beyond prevention to include withstanding, responding to and recovering from incidents so critical services continue. Perimeter-only cybersecurity addresses prevention and does not cover continuity and recovery. Capital and model validation address different risks.

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