Skip to content

FRM Part II · FRM Exam Part II · Contingency Funding Planning

Which responsibility is most appropriately assigned to the board of directors, rather than to management, in relation to the contingency funding plan?

The board should approve the CFP and the liquidity risk tolerance and receive regular reports on testing and early warning indicators. Executing repos, maintaining contact lists and computing intraday positions are operational duties that belong to management and treasury staff.

  1. AExecuting daily repo transactions to raise emergency funding
  2. BApproving the CFP and the liquidity risk tolerance, and receiving regular reporting on its testing and the status of early warning indicatorsCorrect
  3. CMaintaining the contact details of counterparties in the crisis communication tree
  4. DCalculating intraday liquidity positions for each settlement system

Explanation

The board sets risk tolerance and approves the CFP, and oversees reporting on its adequacy. Executing transactions, maintaining contacts and computing intraday positions are management or operational tasks.

Did you get it right without looking?

One question tells you little. A timed set on Contingency Funding Planning shows your real accuracy, how long you take and where you lose marks.

Practise Contingency Funding PlanningFree diagnostic mock

More Contingency Funding Planning questions