FRM Part II · FRM Exam Part II · Risk Governance
Under the Basel Committee's principles for the sound management of operational risk, which body is expected to approve and periodically review the bank's operational risk management framework?
The board of directors approves and periodically reviews the operational risk management framework. Senior management then implements it consistently. Internal audit only gives independent assurance, and business unit heads and external auditors do not own approval of the framework.
- AThe board of directorsCorrect
- BThe internal audit function
- CThe first line of defence business unit heads
- DThe external auditor
Explanation
The principles place responsibility for establishing, approving and periodically reviewing the operational risk management framework with the board of directors. Senior management implements it. Internal audit provides independent assurance but does not approve the framework, and external auditors have no such role.
Did you get it right without looking?
One question tells you little. A timed set on Risk Governance shows your real accuracy, how long you take and where you lose marks.
More Risk Governance questions
- A bank assigns its operational risk function the following: it designs the framework, challenges business line risk and control self-assessm…
- A bank's operational risk function receives monthly loss data from business lines. The Chief Risk Officer notices that several divisions rec…
- Which of the following BEST describes the 'tone from the top' in risk culture?
- A bank's internal audit reviews the operational risk framework. Under the Basel principles, which finding would most clearly indicate a weak…
- At a mid-sized bank, the head of the retail lending business appoints a team inside the business unit to identify, assess and manage the cre…
- A bank's internal audit department is asked by the COO to design the key risk indicator thresholds for the payments business and then, six m…