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FRM Part I · FRM Exam Part I · The Governance of Risk Management

Which activity is MOST appropriately a core responsibility of the CRO rather than of the business lines?

The CRO is responsible for building an enterprise-wide view of risk and reporting aggregate exposures against the board-approved risk appetite. Originating loans and executing hedges are business-line tasks, and independently auditing the framework is internal audit's role, not the CRO's.

  1. AOriginating loans to meet revenue targets
  2. BDeveloping an enterprise-wide view of risk and reporting aggregate exposures against risk appetite to the boardCorrect
  3. CExecuting hedges to reduce the desk's net delta
  4. DPerforming the annual independent audit of the risk framework

Explanation

The CRO provides an aggregated, independent view of risks relative to appetite and reports it to senior management and the board. Origination and hedge execution are first-line tasks, and the independent audit of the framework belongs to internal audit.

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