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Explanation:
According to the Basel Committee's principles for the sound management of operational risk, the board of directors and senior management are responsible for establishing a strong risk management culture. The primary purpose of supervisory risk management and governance in an ORM framework is to develop robust governance policies and processes and ensure that material risks are managed in alignment with the firm's established risk appetite and tolerance. Options A and B are too narrow or specific to other domains, and Option D is overly broad.
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Q.35 Mr. Rihan, a risk specialist at Bank ABC, is presenting to the board of directors on the Basel regulatory expectations for the governance of an operational risk management Framework. What is the purpose of supervisory risk management in the ORM framework of banks in this context?
A
To create a paper trail of compliance activities.
B
To set model documentation standards, data quality expectations, and versioning criteria.
C
To develop robust governance policies and processes and manage material risks per the firm's risk appetite.
D
To oversee all the activities of banks.