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

Under the BCBS 239 principles on risk reporting practices, which of the following best describes the expected characteristic of risk reports delivered to a bank's board and senior management?

Risk reports to the board and senior management should be concise and balanced, combining data, analysis and qualitative commentary so recipients can make decisions. Excessive detail, numbers without interpretation, or production only on request fail the BCBS 239 clarity and usefulness requirement.

  1. AThey should be as detailed as possible so that every exposure is listed individually
  2. BThey should convey information concisely, with a balance of data, analysis and qualitative commentary that supports decision-makingCorrect
  3. CThey should be prepared only in stressed conditions, when the board requests them
  4. DThey should present only quantitative metrics, leaving interpretation to the recipient

Explanation

BCBS 239 requires risk reports to be clear and useful: concise, easy to understand, and balanced between data, analysis and commentary so that decision-makers can act. Exhaustive detail undermines usefulness, and reports must also be available in stress or crisis, not only on request.

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