Explanation:
According to stress testing principles, an independent review should be comprehensive, encompassing both qualitative and quantitative aspects of the stress testing framework, including an assessment of the judgmental considerations involved. Excluding judgmental considerations and leaving them solely to the board would make the review incomplete, making it the least likely action in a proper mandate. Regular monitoring (D) is typically an internal management function, but consultants might be engaged to assess or establish the monitoring framework. However, explicitly skipping judgmental aspects directly violates the principles of a comprehensive independent review.
Ultimate access to all questions.
Q.44 A Canadian bank hires a risk consultancy to conduct an independent review of its stress testing procedures. Which of the following actions would least likely be part of the consultancy's mandate?
A
To ensure that the stress tests are based on sound theory.
B
To ensure that limitations and uncertainties are acknowledged.
C
To cover the qualitative aspects of stress tests while leaving the judgmental considerations to the board.
D
To monitor stress testing results regularly.
No comments yet.