Explanation:
In the context of stress testing governance, the role of internal audit is to provide an independent review and evaluation of the stress testing framework, including assessing its ongoing performance, integrity, and reliability. Management and the board are responsible for establishing policies (A) and resource allocation (D).
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Q.87 What is the role of the internal audit in stress testing governance?
A
Establishing adequate stress testing policies and procedures and ensure compliance with them
B
Monthly statistical back-testing of the stress test estimates against realized outcomes
C
Provision of an independent evaluation of the ongoing performance, integrity, and reliability of stress-testing activities
D
Appropriate resource allocation to ensure proper functioning of stress-test processes
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