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A large bank's internal auditor is reviewing the institution's economic capital framework to ensure compliance with industry best practices. During this assessment, the auditor identifies deficiencies in the bank's governance structure as well as in the methodology used for calculating the firm's overall economic capital. In response, the auditor asks the Chief Risk Officer to suggest corrective actions that conform to established best practices.
A
Require business unit managers to challenge the assumptions for their unit's capital model before providing final approval.
B
Calculate the bank's aggregate economic capital by summing its exposures for different risk types.
C
Incorporate a set of escalation procedures into the bank's contingency plan for its economic capital policy.
D
Discourage the use of macroeconomic scenarios developed by third-party vendors to stress test economic capital models.