medium · Frm Part 2 Operational Risk
A bank defines 'Impact Tolerance' for its clearing service as 'the inability to process more than $50bn in payments in a single day.' During a simulation, a system failure occurs at 10:00 AM. By 2:00 PM, the backlogged payments total $40bn. The RTO for the system is 5 hours.
What is the status of the bank's resilience?
- The bank is resilient because the RTO of 5 hours is shorter than the 24-hour day.
- The bank is in breach of its RTO, but potentially still within its impact tolerance if the system is restored before the $50bn limit is hit.
- The bank should immediately trigger its NSFR recovery plan to provide liquidity for the unpaid settlements.
- The bank is in breach of its impact tolerance because $40bn is close to the $50bn limit.
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