FRM Part II · FRM Exam Part II · Risk Reporting
During a review of its risk reports, a bank finds that the key risk indicator (KRI) section shows only current-month values with no thresholds or prior-period comparison. Which improvement would most increase the report's usefulness to recipients?
Show KRIs with trends over prior periods and clear thresholds that flag breaches, together with owners and agreed actions. This lets recipients see direction of travel and decide what to do. Removing the section or limiting it to the risk team would reduce oversight.
- ARemove the KRI section to shorten the report
- BPresent KRIs with trend over prior periods and defined thresholds showing breaches, with owners and actionsCorrect
- CReplace the KRIs with the number of employees in each department
- DReport KRIs only to the operational risk team
Explanation
KRIs are useful when compared with thresholds and past values, so recipients can see direction and breaches and who must act. Removing them or restricting distribution reduces oversight, and headcount is not a risk indicator for this purpose.
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