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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 a bank's risk management reports?

Risk reports should be accurate and precise, giving aggregated risk data that fairly reflects the bank's risk so that management and the board can make informed decisions. They need validation and reconciliation, and should be clear and useful rather than exhaustive, with frequency set by the risk and the audience's needs.

  1. AThey should be as detailed as possible so that every exposure is listed regardless of the audience
  2. BThey should be accurate and precise, conveying aggregated risk data that reflects risk in a manner that supports informed decisionsCorrect
  3. CThey should be produced only quarterly to coincide with financial statements
  4. DThey should be prepared by business lines independently, without validation by risk management

Explanation

BCBS 239 requires risk reports to be accurate and precise, with approvals and validation procedures, so that decisions can rely on them. Listing everything for every audience ignores the clarity and usefulness principle. Fixed quarterly cadence ignores the frequency principle, and unvalidated business-line reports weaken accuracy.

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