Financial Risk Manager Part 2
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A Chief Financial Officer (CFO) is interested in assessing the robustness of the financial institution's backup funding strategy to ensure it includes all necessary components. Which statement most accurately identifies the critical elements that should be incorporated in an effective contingency funding plan (CFP)?
A Chief Financial Officer (CFO) is interested in assessing the robustness of the financial institution's backup funding strategy to ensure it includes all necessary components. Which statement most accurately identifies the critical elements that should be incorporated in an effective contingency funding plan (CFP)?
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A
Liquidity stress testing scenarios are designed to focus solely on institution-specific risks and address both market (asset) liquidity and funding liquidity, over short-term and prolonged stress periods.
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B
Institutions should align their CFP stress scenarios to those in its liquidity stress testing framework, as well as to other frameworks such as recovery and resolution plans.
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