FRM Part II · FRM Exam Part II · Risk Governance
Which responsibility is most appropriately assigned to the board of directors within an operational risk governance framework?
The board should approve the operational risk framework and risk appetite and oversee senior management's implementation of them. Day-to-day control testing, loss event recording and model validation are operational tasks performed by management and independent functions, not the board.
- APerforming daily control testing in each business process
- BApproving the operational risk framework and risk appetite and overseeing senior management's implementationCorrect
- CConducting independent validation of all operational risk models
- DRecording and classifying individual loss events in the loss database
Explanation
The board sets direction by approving the framework and appetite and overseeing senior management. Daily control testing and event logging sit with the first line, and independent model validation is carried out by an independent function.
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