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

Under BCBS 239, which of the following best describes the primary objective of the Principles for effective risk data aggregation and risk reporting?

The principles aim to strengthen banks' risk data aggregation and internal risk reporting so that management can identify and manage risks reliably, particularly in stress. They do not set capital ratios, accounting rules or mandate a particular vendor system.

  1. ATo strengthen banks' risk data aggregation capabilities and internal risk reporting practices so that risk can be identified and managed, especially in stressCorrect
  2. BTo set minimum regulatory capital ratios for credit, market and operational risk
  3. CTo standardise the accounting treatment of loan losses across jurisdictions
  4. DTo require all banks to use a single common IT vendor platform for risk reporting

Explanation

BCBS 239 was issued after the financial crisis exposed that banks could not aggregate exposures quickly and accurately. Its aim is to improve data aggregation and reporting capabilities, not to set capital ratios (Basel III does that) or prescribe accounting or vendors.

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