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

A supervisor finds that a bank cannot produce accurate aggregated exposure reports during stress conditions, although it does so adequately in normal times. Under BCBS 239, what is the most appropriate supervisory response?

The supervisor should require timely corrective action, such as a remedial plan with deadlines, and escalate if the bank does not progress. The principles apply in stress as well as normal times, so a stress-time weakness is a compliance deficiency, not a reason for a waiver.

  1. ATake no action, since the principles apply only in normal conditions
  2. BRequire timely corrective action, potentially including remedial plans with deadlines, and use escalation tools if the bank does not progressCorrect
  3. CWaive the principles for the bank for one reporting cycle
  4. DRequire the bank to stop producing risk reports until systems are replaced

Explanation

BCBS 239 expects risk data aggregation capabilities to work in both normal times and times of stress or crisis. Principle 13 requires supervisors to be able to require timely corrective action and to escalate if progress is inadequate. Ignoring or waiving the weakness, or banning reports, is inconsistent with this.

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