Financial Risk Manager Part 1
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Vijay Kumar, Sonnet Bank's Chief Risk Officer, writes in the management discussion and analysis (MD&A) section of the bank's annual report that Sonnet Bank, at all times, devotes its human and financial resources to the improvement of risk data aggregation as it considers data aggregation and reporting a part of the bank's planning processes. He also writes that the bank has established multiple data models that are used as robust automated reconciliation measures. Kumar's comments are aligned with one of the key principles of risk data aggregation. Identify that principle.
Other
Community
TTanishq
A
Adaptability
B
Comprehensiveness
C
Distribution
D
Data Architecture and Infrastructure
Explanation:
Explanation
The correct answer is D. Data Architecture and Infrastructure.
Why D is Correct:
Vijay Kumar's statements align with the second principle of risk data aggregation - 'Data Architecture and Infrastructure'. This principle requires that:
- Banks should dedicate human and financial resources to improving risk data aggregation, especially during stressful times
- Risk data aggregation and reporting should be incorporated into the bank's planning processes and be subject to business impact analysis
- Banks must establish integrated data classifications and architecture across the banking group
Kumar's specific comments about:
- The bank's commitment to enhancing risk data aggregation
- Considering data aggregation and reporting as integral parts of the bank's planning processes
- Establishment of various data models for robust automated reconciliation measures
All indicate adherence to the 'Data Architecture and Infrastructure' principle.
Why Other Options are Incorrect:
- A. Adaptability: Refers to the ability of a bank's risk data aggregation capabilities to change in response to varying business needs, which is not specifically mentioned in Kumar's statements.
- B. Comprehensiveness: Pertains to the inclusion of all material risk data into the scope of aggregation, but Kumar does not explicitly mention this aspect.
- C. Distribution: Refers to the dissemination of risk management reports at all relevant levels within a bank, which isn't directly addressed by Kumar's comments.
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