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

Which of the following is a core responsibility of the CRO in a financial institution?

The CRO oversees development and implementation of the firm-wide risk management framework and reports aggregate risk exposures to senior management and the board. Originating business, issuing audit opinions, or setting profit-only bonuses belong to other functions and would conflict with the CRO's independent oversight role.

  1. AOriginating loans to maximize revenue for the credit division
  2. BOverseeing the development and implementation of the firm-wide risk management framework and reporting risk exposures to the boardCorrect
  3. CPreparing and signing the external audit opinion
  4. DSetting trader bonuses based solely on desk profit

Explanation

The CRO is responsible for the enterprise-wide risk framework and for giving the board and senior management an aggregate view of risk. Originating loans is a first-line activity, the audit opinion belongs to the external auditor, and bonus-by-profit is not a CRO duty.

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