FRM Part II · FRM Exam Part II · Digital Resilience and Financial Stability: The Quest for Policy Tools in the Financial Sector
A supervisor is concerned that many banks rely on the same cloud provider, so one outage could disrupt payments across the system at once. Which macroprudential-style approach most directly addresses this concentration of digital dependencies?
Identifying critical third-party providers and applying system-wide oversight, concentration monitoring and exit plans best addresses shared cloud dependency. The risk is a common operational point of failure, which capital, leverage or liquidity buffers do not directly mitigate.
- ARaising each bank's minimum leverage ratio
- BIdentifying critical third-party providers and setting system-wide oversight and concentration limits or exit plansCorrect
- CRequiring banks to hold more high-quality liquid assets against deposit outflows
- DLowering the countercyclical capital buffer to zero
Explanation
Cloud concentration is a systemic third-party dependency. Designating critical providers and applying oversight, concentration monitoring and exit or substitutability planning targets the shared exposure. Leverage and liquidity buffers address solvency or funding, not common operational dependency, and the countercyclical buffer relates to credit cycles.
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