Explanation:
Principle 3 of the operational risk management framework specifies that the board of directors should establish, approve and periodically review the Framework. As part of this principle, the board is responsible for ensuring that the ORM framework is subject to effective and comprehensive independent review by appropriately trained and competent personnel. This ensures that the framework remains robust, up to date, and effective at managing operational risks.
Choices A, B, and D relate more closely to Principle 4, which deals specifically with the board's responsibilities regarding the bank's risk appetite and tolerance statements.
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Q.5057 The 3rd principle of operational risk management outlines the roles of the board of directors in operational risk governance. Which of the following roles of the board is in line with principle 3?
A
Identify the types and levels of operational risks the bank is willing to assume, as well as approve risk appetite and risk tolerance statements
B
Regularly review the bank's risk appetite and tolerance statements' appropriateness
C
Ensure the ORM framework is subject to independent review by sufficiently skilled personnel
D
Ensure that they consider all risks when approving the bank's risk appetite and tolerance statements which provide details on risk limits and thresholds.
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