easy · Frm Part 2 Operational Risk
A regulator assesses a bank's 'Digital Concentration.' They find that 80% of the bank's Tier-1 models are provided by a single software vendor.
What is the most likely systemic concern?
- The models will become too diverse to be governed by a single board.
- A single defect or vulnerability in the vendor's software could cause a synchronized failure across multiple risk functions.
- The bank is violating DORA by using software instead of manual processes.
- The bank will have too much capital headroom.
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