Skip to content

FRM Part I · FRM Exam Part I · The Governance of Risk Management

Who is primarily responsible for approving a firm's risk appetite statement and holding senior management accountable for operating within it?

The board of directors approves the risk appetite statement and holds senior management accountable for staying within it. Management implements it, business lines operate within it, and internal audit gives independent assurance, but none of them carries ultimate responsibility for setting the firm's risk appetite.

  1. AThe internal audit department
  2. BThe board of directorsCorrect
  3. CThe front-office business line heads
  4. DThe external auditors

Explanation

Governance principles place ultimate responsibility for setting and approving risk appetite with the board, which then oversees management's adherence. Management implements it and business lines operate within it. Internal audit provides independent assurance, and external auditors review financial statements; neither owns the RAS.

Did you get it right without looking?

One question tells you little. A timed set on The Governance of Risk Management shows your real accuracy, how long you take and where you lose marks.

Practise The Governance of Risk ManagementFree diagnostic mock

More The Governance of Risk Management questions