FRM Part I · FRM Exam Part I · The Governance of Risk Management
Which of the following is the primary responsibility of the board of directors with respect to a firm's risk appetite statement?
The board's primary responsibility is to approve the risk appetite statement and ensure it aligns with the firm's strategy and capital plans. Daily risk measurement, trader limits and model validation are delegated to management and independent control functions.
- ACalculating daily VaR for each trading desk
- BApproving the RAS and ensuring it aligns with strategy and capital plansCorrect
- CSetting individual trader position limits
- DIndependently validating all pricing models
Explanation
The board approves the RAS and ensures it is consistent with strategy, capital and risk capacity. Daily VaR, trader limits and model validation are management or control-function tasks.
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