FRM Part II · FRM Exam Part II · Digital Resilience and Financial Stability: The Quest for Policy Tools in the Financial Sector
A regulator is designing a framework for operational resilience across the financial sector. Which design choice best reflects a sound macroprudential, system-wide view as opposed to a purely firm-level view?
Coordinating incident reporting, running sector-wide scenario exercises and mapping interdependencies is the system-wide approach. It captures contagion through shared providers and infrastructures that firm-by-firm compliance misses. Isolated assessments, unstructured self-reporting or banning outsourcing do not provide a sound macroprudential view.
- AAssess each firm in isolation, since firm-level compliance guarantees system stability
- BRely exclusively on firms' self-reported incident data without any shared reporting standards
- CCoordinate incident reporting, sector-wide scenario exercises and mapping of interdependencies so that contagion through common providers and infrastructures can be assessedCorrect
- DEliminate all ICT outsourcing by regulated firms
Explanation
A system-wide view recognizes that individually resilient firms can still be exposed through shared providers, market infrastructures and networks. Coordinated reporting, sector exercises and interdependency mapping let authorities assess contagion. Isolated firm assessment misses these links, and banning outsourcing is impractical and not a standard policy tool.
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