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FRM Part II · FRM Exam Part II · Contingency Funding Planning

Which communication approach is most consistent with good CFP crisis management procedures during a liquidity stress?

The bank should have pre-agreed communication plans with designated spokespeople and consistent messages to depositors, counterparties, rating agencies, regulators and staff. Coordinated, timely communication limits rumors and run behavior, whereas silence, fragmented business-line messages or regulator-only contact can worsen loss of confidence.

  1. AAvoid all external communication until the crisis has ended
  2. BHave pre-agreed communication plans with designated spokespeople and consistent messages to depositors, counterparties, rating agencies, regulators and staffCorrect
  3. CAllow each business line to communicate independently with its own clients
  4. DCommunicate only with the regulator and let the market draw its own conclusions

Explanation

Silence or inconsistent messages fuel rumors and run behavior. A predefined plan with designated spokespeople and coherent messaging to all stakeholders preserves confidence. Independent business-line messaging risks contradictions, and regulator-only communication ignores other key stakeholders.

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