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

During a market stress event, a bank's senior management can obtain reliable reports on its largest counterparty exposures only after five business days, although the reports are accurate when delivered. Which BCBS 239 reporting practice is most clearly deficient?

Timeliness is deficient. BCBS 239 expects banks to produce accurate risk reports quickly, with critical exposures such as large counterparty positions available fast enough in stress or crisis conditions. Accuracy is not the issue since the report is correct when delivered; the five-day delay undermines its usefulness for decisions.

  1. AComprehensiveness, because the report omits some risk types
  2. BAdaptability, because the report format is fixed
  3. CTimeliness of reporting, because reports must be producible quickly in stress or crisis conditionsCorrect
  4. DAccuracy, because the data are reconciled

Explanation

The data are accurate, so accuracy is not the issue. The problem is that reports on critical exposures arrive too slowly for stress conditions. BCBS 239 requires that banks be able to generate reliable risk reports promptly, with the required speed depending on the risk's nature and volatility, and especially in a crisis.

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