Explanation:
A contingency plan is indeed a 'Plan B' or an alternative course of action if the outcome of a future event does not proceed as anticipated. Contingency planning is a component of business continuity management (BCM), disaster recovery plans (DRP), and corrective risk management. It should clearly specify who is responsible for what and when in the event of a crisis. In broader contexts, it ensures operational continuity.
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Q.5086 Paul Schering, FRM, works as a risk manager at ABC Bank. Paul wishes to present to the bank approaches firms should use to mitigate the impact of operational risk events. Which of the following statements highlighted by Paul is correct?
A
A contingency plan is simply a "Plan B" or an alternative action if the result of a future event does not go as expected
B
The first step in business continuity management (BCM) is identifying threats and risks and linking these risks to the firm's key operational risks
C
In case of a crisis, a firm should have at least one response team: the technical team
D
In case of a crisis, a communications team to assess the risk event and restore normal processes