Financial Risk Manager Part 1
Get started today
Ultimate access to all questions.
Comments
Loading comments...
Ultimate access to all questions.
A newly hired banking supervisor at a financial regulatory agency is reviewing the stress testing program of a bank to ensure the program reflects the best practices presented in the Basel Committee's stress-testing principles. Which of the following suggestions can the supervisor make that would be consistent with best practice?
A
The bank's management team should fully delegate critical stress testing responsibilities, such as setting objectives and defining scenarios, to experts in the risk management area.
B
The bank's business units should individually estimate the impacts of stress scenarios without considering interactions between their unit and others, to accurately estimate the true risk of each unit.
C
The bank should include scenarios in its stress tests featuring potential shocks to the bank's portfolio that have not occurred in the past.
D
The bank should not consider system-wide liquidity in its stress testing, as this issue is outside the intended scope of these tests.