easy · FRM Part 2 Operational Risk
A business unit head argues that they don't need to perform an RCSA because 'we haven't had a loss in five years.'
As a risk officer, how do you refute this?
- Explain that 'no losses' is a lagging indicator and doesn't account for future exposure or 'near-misses.'
- Tell them RCSA is a mandatory statutory accounting rule required strictly for tax reporting purposes.
- Show them the firm's recent stock price movement as direct evidence that their view is wrong.
- Agree with them outright, since realized historical losses are the only true measure of risk exposure.
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