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FRM Part I · FRM Exam Part I · Principles for Effective Data Aggregation and Risk Reporting

Which of the following is a requirement of BCBS 239 Principle 1 (Governance) regarding a bank's risk data aggregation and reporting framework?

Principle 1 requires strong governance of the risk data aggregation and reporting framework, with the board and senior management accountable for it. Responsibility cannot be pushed solely onto IT, scope is not limited to the trading book, and independent validation is expected rather than prohibited.

  1. AThe framework should be subject to strong governance arrangements consistent with other BCBS guidance, with board and senior management responsibilityCorrect
  2. BResponsibility for data quality should rest solely with the IT department
  3. CGovernance requirements apply only to the bank's trading book data
  4. DIndependent validation of the framework is prohibited to avoid duplicating internal audit work

Explanation

Principle 1 places responsibility for risk data aggregation and reporting on the board and senior management, who must ensure resources and oversight. Delegating solely to IT, limiting scope to trading, or banning independent validation contradicts the principle, which calls for independent validation.

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