easy · FRM Part 2 Operational Risk
An operational risk manager notes that a business unit consistently scores all of its residual risks as 'Green' in its RCSA workshops. However, internal loss data (ILD) shows several material losses over the same period.
This discrepancy most likely indicates which RCSA weakness?
- The exclusion of legal risk from the operational risk taxonomy.
- Excessive reliance on external data scaling.
- A lack of independence and self-assessment bias.
- The model risk inherent in the Loss Distribution Approach (LDA).
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