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ACCA Strategic Professional · Strategic Business Leader · Managing, monitoring and mitigating risk

Orchid Bank has a business continuity plan that includes an alternative data centre. Management states that the plan has been approved by the board and filed, but it has never been simulated. A regulator asks what the most significant weakness is. Which is the most appropriate answer?

The key weakness is that the plan has never been tested. Without simulations or exercises there is no assurance that the alternative data centre, staff roles and recovery times will work in a real disruption. Approval by the board does not demonstrate effectiveness.

  1. AThe plan should have been prepared by external consultants rather than staff
  2. BThe plan has not been tested, so there is no assurance that it would work in a real disruptionCorrect
  3. CThe plan should have been approved by shareholders rather than the board
  4. DThe plan should cover only IT failures, not wider operational disruption

Explanation

A continuity plan is only reliable if rehearsed through exercises or simulations, which reveal gaps, train staff and confirm recovery times. Approval and filing give no evidence of effectiveness. Who prepares it is less important than whether it works, and limiting the scope to IT would narrow it inappropriately.

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