Financial Risk Manager Part 1

Explanation

Correct Answer: C (Accuracy and integrity)

This principle is one of the key principles of risk data aggregation that emphasizes the importance of maintaining the accuracy and integrity of risk data. This principle requires banks to:

• Document both automated and manual workarounds
• Define the circumstances and reasons for which human interventions are critical for data accuracy
• Ensure clear understanding of processes involved in data aggregation

This is crucial because it ensures that data is not only accurate but also reliable, and provides clear understanding of the role of human intervention in maintaining data accuracy.

Why other options are incorrect:

A. Timeliness - Refers to the need for risk data to be reported in a timely manner for prompt decision-making, but does not specifically require maintaining records of automated/manual workarounds or explaining human intervention circumstances.

B. Adaptability - Pertains to the ability of risk data systems to adapt quickly to changing business needs, regulatory changes, or market conditions, but does not necessitate maintaining records of interventions or explaining their necessity.

D. Clarity and usefulness - Refers to the requirement that risk data should be clear, understandable, and useful for decision-making, but does not specifically mandate banks to elucidate the circumstances and reasons for which human interventions are deemed crucial for ensuring data accuracy.