FRM Part II · FRM Exam Part II · Risk Governance
Which of the following BEST describes the 'tone from the top' in risk culture?
Tone from the top means the board and senior management consistently model and enforce the risk values they expect, through their own conduct and decisions, including how they treat breaches by high performers. It is about demonstrated behavior, not merely written policies or structures.
- ASenior management and the board consistently demonstrate and enforce the risk values they expect, through their own behavior and decisionsCorrect
- BThe set of written policies approved by the board each year
- CThe compensation formula for senior executives only
- DThe reporting lines of the risk function
Explanation
Tone from the top is about leaders modeling and visibly enforcing expected risk behavior; employees watch actions, such as how breaches by top performers are handled. Written policies, pay formulas and reporting lines are tools, not the tone itself.
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