Explanation:
Effective EWI measures should be forward-looking and sharp (granular and specific) to proactively capture potential liquidity events. They should encompass both internal and external (market) metrics, be strictly linked to an escalation process, and be robust and relevant during both business-as-usual and stressed environments.
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20.4.2. Venkat writes that "The EWI framework can be summarized as M.E.R.I.T" where the (M) refers to measures. Which of the following is a TRUE characteristic (or feature) of good Early Warning Indicator (EWI) measures?
A
Only internal but not external measures
B
Forward-looking and sharp (i.e., granular and specific)
C
Measures are disassociated (aka, de-linked) from the escalation process
D
Measures are tracked during business-as-usual environments but should not be affected by stressed environments
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