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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

During a severe cyber incident affecting a payment service provider used by many banks, authorities want a coordinated response. Which feature of a crisis coordination framework would most improve the sector's ability to limit contagion?

Pre-agreed communication protocols and defined roles among firms, regulators and critical providers, validated through joint exercises, best limit contagion. They enable fast, consistent decisions during an incident, while ad hoc contacts, uncoordinated timing or legal-only channels create delay and confusion.

  1. APre-agreed communication protocols and roles among firms, regulators and critical service providers, tested through joint exercisesCorrect
  2. BEach firm independently deciding its own communication timing to preserve competitive position
  3. CRelying on ad hoc contacts established after the incident begins
  4. DRestricting communication to the affected provider's legal team

Explanation

Pre-agreed roles and communication protocols, rehearsed in joint exercises, reduce confusion and delay during an incident, which limits contagion across interconnected firms. Ad hoc or uncoordinated approaches waste time when it matters most. Restricting communication to legal staff cuts out operational and supervisory partners.

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