FRM Part II · FRM Exam Part II · Risk Reporting
Which approach best reflects sound practice when a firm reports operational resilience to its board?
Best practice is to report to the board on performance against impact tolerances for important business services, scenario testing results, and vulnerabilities with remediation status. This shows actual ability to withstand disruption, unlike counts of documented plans or annual loss totals.
- AReporting only the number of business continuity plans documented
- BReporting performance against impact tolerances for important business services, results of scenario testing, and identified vulnerabilities with remediation statusCorrect
- CReporting only the annual operational loss total
- DReporting resilience only to the IT department
Explanation
Resilience reporting should be outcome-focused: whether important services can stay within tolerance under severe but plausible scenarios, what weaknesses were found and how they are being fixed. Counting plans or losses does not show ability to withstand disruption.
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