medium · FRM Part 2 Operational Risk
A bank's impact tolerance for 'Securities Lending' is defined as 'disruption exceeding 24 hours.' A scenario test shows that while the system can be recovered in 4 hours, it would take 30 hours to manually reconcile the data corrupted during the event.
What does this indicate?
- The bank is resilient because its recovery time of 4 hours is well within the 24-hour impact tolerance limit.
- The bank should revise its RPO target to 30 hours so it aligns with the manual reconciliation time seen in this scenario test.
- The bank has failed its impact tolerance because the end-to-end recovery time (34 hours) exceeds the 24-hour threshold.
- Reconciliation time is classified as indirect labor cost and is therefore excluded from formal resilience testing scope entirely.
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
- In the Bow-Tie analysis framework, where do 'Preventive Controls' sit relative to the oper
- A customer consistently deposits $9,800 in cash at three dif… — This behavior is a classic
- The Standardized Measurement Approach (SMA) formula is composed of two primary factors: th
- What is the regulatory treatment for 'Boundary Events' regarding capital requirements unde
- In the Standardized Measurement Approach (SMA), the Business Indicator (BI) serves as a pr
- Under a proper governance framework, 'Model Limitations' must be:
- If the bank had a poor loss history (LC > BIC), what is the impact on its capital?