Financial Risk Manager Part 2
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In the context of financial risk management, specifically within the framework of ensuring liquidity and ongoing operations, a Chief Financial Officer (CFO) is looking to assess the institution's backup funding strategy. The goal is to confirm that all fundamental aspects required for a robust Contingency Funding Plan (CFP) are incorporated. Which of the following statements accurately reflects the key components that should be part of an effective CFP?
In the context of financial risk management, specifically within the framework of ensuring liquidity and ongoing operations, a Chief Financial Officer (CFO) is looking to assess the institution's backup funding strategy. The goal is to confirm that all fundamental aspects required for a robust Contingency Funding Plan (CFP) are incorporated. Which of the following statements accurately reflects the key components that should be part of an effective 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.
12.7%
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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