Skip to content

CS Professional · Banking and Insurance - Laws and Practice · Risk Management in Banks and Basel Accords

Kaveri Bank's Board wants to set up a governance structure for risk. Which arrangement best reflects the usual RBI-expected risk governance framework?

The Board approves risk policies and appetite, a Board-level Risk Management Committee oversees them, and senior management implements them. Ultimate responsibility stays with the Board; auditors and the RBI supervise or review but do not own the bank's risk management.

  1. ABoard approves risk policies and appetite, with a Risk Management Committee of the Board overseeing them and senior management implementing themCorrect
  2. BRisk policy is framed and approved solely by the branch managers without Board involvement
  3. COnly the statutory auditor is responsible for setting the bank's risk limits
  4. DThe Board delegates all risk oversight to the RBI inspection team

Explanation

Under RBI guidance the Board holds ultimate responsibility for risk: it approves policies and risk appetite, a Board-level Risk Management Committee oversees them, and senior management executes. Branch managers or auditors cannot substitute for the Board, and RBI supervises but does not run the bank's risk management.

Did you get it right without looking?

One question tells you little. A timed set on Risk Management in Banks and Basel Accords shows your real accuracy, how long you take and where you lose marks.

Practise Risk Management in Banks and Basel AccordsFree diagnostic mock

More Risk Management in Banks and Basel Accords questions