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FRM Part I · FRM Exam Part I · Enterprise Risk Management and Future Trends

Which of the following is the most appropriate responsibility of a board-level risk committee?

A board-level risk committee reviews and recommends the firm's risk appetite and oversees management's risk framework and principal exposures. It does not approve individual trades, run daily valuations, or prepare the financial statements, which are management or finance responsibilities.

  1. AReviewing and recommending the risk appetite and overseeing management's risk framework and major exposuresCorrect
  2. BApproving each individual trade above a set size before execution
  3. CRunning the daily valuation of the trading book
  4. DPreparing the statutory financial statements

Explanation

Board risk committees oversee the risk framework, review and recommend the risk appetite, and monitor major exposures. Approving individual trades and daily valuation are management functions, and preparing financial statements belongs to finance and the audit committee.

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