easy · FRM Part 2 Operational Risk
In the context of Model Risk Management, what is 'effective challenge'?
- A mandatory internal code-review session performed solely by the original model developer themselves.
- A formal debate between two competing desk traders about which model produces the highest daily trading profit.
- The process of a banking regulator issuing a formal fine or public sanction after a serious model failure has occurred.
- Critically evaluating a model's logic and testing its limitations by a party not involved in its development.
Sign up free to see the explanation and track your rank →
More FRM Part 2 Operational Risk practice
- Which of the following describes the 'One Big Loss' principle for heavy-tailed (subexponen
- Under the current Basel Standardized Measurement Approach (SMA) for operational risk, whic
- Which of the following is NOT one of them?
- What is the marginal coefficient for the portion of the BI that exceeds 30 billion euros?
- According to standard regulatory definitions (such as SR 11-7), which three components are
- A material change to a model is most likely to be triggered by which event?
- How long is the historical window required for calculating the average annual operational
- In the Bow-Tie analysis framework, where do 'Preventive Controls' sit relative to the oper