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FRM Part I · FRM Exam Part I · Principles for Effective Data Aggregation and Risk Reporting

Which statement best reflects the BCBS 239 requirement on governance (Principle 1) for risk data aggregation and reporting?

The board and senior management are responsible for the risk data aggregation and reporting framework. They must ensure strong governance, adequate resources, and consistency with the bank's risk appetite. Leaving accountability only to IT, or excluding material subsidiaries, would not satisfy the governance principle of BCBS 239.

  1. AThe board and senior management are responsible for the bank's risk data aggregation and reporting framework, including its strong governance and its alignment with the bank's risk appetiteCorrect
  2. BThe IT department alone is accountable for risk data quality, and the board need only receive the final reports
  3. CGovernance arrangements need only be validated by external auditors, with no internal independent review
  4. DGovernance requirements apply only to the group parent and not to material subsidiaries

Explanation

Principle 1 states that a bank's risk data aggregation capabilities and reporting practices should be subject to strong governance arrangements consistent with the other Basel principles. The board and senior management own the framework and must ensure adequate resources. Delegating it solely to IT contradicts this, and the framework must also cover material entities and be subject to independent validation.

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