FRM Part II · FRM Exam Part II · Governance
Which feature best distinguishes a strong risk culture from one that merely has formal risk policies?
A strong risk culture is shown by staff at every level feeling able to escalate concerns and being held accountable for risk outcomes irrespective of seniority. Policies alone do not demonstrate this, since culture is about actual behavior and incentives.
- AEmployees at all levels feel able to escalate concerns and are held accountable for risk outcomes regardless of seniorityCorrect
- BThe number of policies exceeds that of peer banks
- CRisk reports are produced only when regulators request them
- DRisk limits are set by business lines without independent review
Explanation
Culture is revealed by behavior: open escalation, challenge, and accountability applied consistently. Policy volume, reactive reporting, and unreviewed limits do not show embedded risk awareness.
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