FRM Part II · FRM Exam Part II · Risk Governance
Which of the following is a responsibility the Basel principles assign to senior management, rather than to the board, regarding operational risk?
Senior management develops and implements a robust governance structure with clear, transparent lines of responsibility to carry out the board-approved framework. Approval of risk appetite and tolerance remains with the board, so that option belongs to the board rather than to management.
- ADeveloping a clear, effective and robust governance structure with well-defined, transparent lines of responsibility to implement the approved frameworkCorrect
- BApproving the overall operational risk appetite and tolerance statement
- CEnsuring the board itself is independent of management
- DAppointing the external auditor
Explanation
Senior management translates the board-approved framework into policies, processes and systems, including a governance structure with clear lines of responsibility. Approving risk appetite is a board task. The other options are not senior management duties under the principles.
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