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Answer: Increase the bandwidth capacity for the firm's equity trading platform and procure remote backup capabilities so the platform can continue to function during an outage.
## Explanation **Option D** is the most appropriate recommendation because it directly addresses operational resilience by ensuring business continuity during disruptions. Operational resilience focuses on the ability to continue delivering important business services through operational disruptions, and this option specifically enhances the firm's trading platform capacity and provides backup capabilities. **Why other options are less appropriate:** - **Option A**: Performance incentives for productivity enhancement are related to business growth and efficiency, not operational resilience. They don't address the firm's ability to withstand or recover from disruptions. - **Option B**: Consolidating HR and payroll functions is a cost-saving measure that could actually increase operational risk by creating single points of failure, potentially reducing resilience. - **Option C**: While reserving additional economic capital is important for financial resilience, operational resilience focuses more on operational capabilities, processes, and infrastructure to maintain service delivery during disruptions, rather than just financial buffers. **Key Regulatory Focus on Operational Resilience:** - Ensuring continuity of important business services - Maintaining critical operations during disruptions - Having robust backup and recovery capabilities - Focusing on service delivery rather than just financial protection Option D directly aligns with these regulatory expectations by enhancing the firm's technological infrastructure to maintain trading platform functionality during outages.
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A UK-based retail brokerage firm has recently experienced rapid growth through a series of acquisitions and plans to improve its operational resilience in order to comply with new requirements issued by national regulators. The CRO asks an operational risk manager to assess best practices in this area and to suggest potential actions that the firm should take to meet this objective. Which of the following actions would be most appropriate for the manager to recommend in order to comply with the regulatory guidelines concerning operational resilience for important business services?
A
Increase the existing performance incentives for the firm's brokers and sales representatives to further enhance their productivity.
B
Reduce costs by consolidating the human resources and payroll functions of the acquired firms into a single firm-wide process.
C
Reserve additional economic capital for operational risk to provide an incremental capital cushion against potentially extreme operational losses.
D
Increase the bandwidth capacity for the firm's equity trading platform and procure remote backup capabilities so the platform can continue to function during an outage.