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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 supervisor is designing a sector-wide cyber incident reporting regime. Which design choice best balances the benefits of timely information for authorities with the burden on affected firms?

Tiered reporting with a quick initial notification followed by fuller updates, supported by harmonised incident definitions and thresholds, best balances timeliness for authorities against burden on firms. It avoids infeasible forensic deadlines and avoids missing early signals from voluntary or loss-only regimes.

  1. ARequiring full forensic reports within one hour of detection
  2. BVoluntary reporting only, with no common definitions of reportable incidents
  3. CReporting only incidents that have caused confirmed customer financial losses
  4. DTiered reporting with an early initial notification followed by fuller updates, using harmonised incident definitions and thresholdsCorrect

Explanation

Tiered reporting gives authorities early awareness while allowing firms to focus on response before producing detailed analysis. Harmonised definitions reduce fragmentation and duplication. Full forensics in one hour is infeasible; voluntary or loss-only reporting misses early signals.

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