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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 statement best describes the expected characteristic of risk management reports produced for a bank's board and senior management?

Risk reports should be accurate and precise, with figures reconciled to sources like accounting data and with any approximations clearly explained. BCBS 239 stresses reliable, validated reporting that supports decisions, not exhaustive data dumps, quarter-end-only production, or unvalidated business-line preparation.

  1. AThey should contain every available risk data point so that no information is omitted
  2. BThey should be accurate and precise, with reported figures reconciled to sources such as accounting data and with approximations explainedCorrect
  3. CThey should be produced only at quarter-end to ensure full reconciliation
  4. DThey should be prepared by business lines without independent validation to preserve speed

Explanation

BCBS 239 requires risk reports to be accurate and precise, conveying aggregated risk data correctly. Reports should be reconciled and validated, and any approximations or estimates should be explained. Reports containing every data point defeat the requirement for clarity and usefulness.

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