Financial Risk Manager Part 1
Get started today
Ultimate access to all questions.
Comments
Loading comments...
Ultimate access to all questions.
The board of directors of a mid-size bank has recommended that the bank adopt the Basel principles for data aggregation and risk reporting. The bank currently has three different business units for its retail banking, commercial banking, and credit card operations. It also maintains some internally developed models and is introducing artificial intelligence (AI) techniques in data management. In assessing the impact and best practice of complying with the Basel principles for data aggregation and risk reporting, which of the following statements is most appropriate?
A
Business units of the bank should adopt departmental applications and methodologies for data management that are customized for each business unit.
B
Complying with the Basel principles should reduce the bank's exposure to model risk as the quality of data input in a model will likely improve.
C
An exponential increase in the application of AI techniques in data management is not likely to impose additional challenges to the compliance with Basel principles.
D
The Basel principles recommend that the bank outsource its model validation function to an external third party in order to provide an independent review.