Explanation:
The correct answer is D.
Data Architecture and Infrastructure (Principle 2 of the BCBS 239) dictates that a bank should design, build, and maintain data architecture and IT infrastructure which fully supports its risk data aggregation capabilities and risk reporting practices not only in normal times but also during times of stress or crisis. This includes integrating data aggregation into the bank's planning processes, devoting adequate human and financial resources, and establishing robust automated reconciliation procedures.
Option A is incorrect: Adaptability (Principle 4) refers to a bank's ability to generate aggregate risk data to meet a broad range of on-demand, ad hoc risk management reporting requests, including those during crisis situations. Option B is incorrect: Comprehensiveness (Principle 5) applies more to risk reporting, requiring reports to cover all material risk areas within the organization. Option C is incorrect: Distribution (Principle 11) relates to ensuring that risk reports are distributed to the relevant parties while ensuring confidentiality.
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Q.262 Vijay Kumar, Sonnet Bank's Chief Risk Officer, writes in the management discussion and analysis (MD&A) section of the bank's annual report that Sonnet Bank, at all times, devotes its human and financial resources to the improvement of risk data aggregation as it considers data aggregation and reporting a part of the bank's planning processes. He also writes that the bank has established multiple data models that are used as robust automated reconciliation measures. Kumar's comments are aligned with one of the key principles of risk data aggregation. Identify that principle.
A
Adaptability
B
Comprehensiveness
C
Distribution
D
Data Architecture and Infrastructure
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