medium · FRM Part 2 Operational Risk
A bank defines 'Impact Tolerance' for its clearing service as 'the inability to process more than $50 bn 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 $40 bn. The RTO for the system is 5 hours.
What is the status of the bank's resilience?
- The bank is fully resilient because its 5-hour RTO for the affected system is comfortably shorter than the full 24-hour business day.
- The bank is in breach of its RTO, but potentially still within its impact tolerance if the system is restored before the $50 bn limit is hit.
- The bank should immediately trigger its NSFR recovery plan to source additional short-term liquidity for the growing backlog of unpaid settlements.
- The bank is already in clear breach of its impact tolerance because the $40 bn backlog amount is dangerously close to the $50 bn regulatory limit.
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