medium · FRM Part 2 Operational Risk
A bank is evaluating the use of Machine Learning (ML) to triage transaction monitoring alerts.
Which new risk-management obligation does this 'ML Triage' model create?
- It allows the bank to shift all AML monitoring responsibilities entirely from the first line onto the IT department.
- The bank must validate the 'explainability' of suppressed alerts to prove that the model is not creating invisible false negatives.
- The ML model must be trained exclusively on external loss data sourced from competitor institutions rather than internal history.
- It removes the bank's need to file Suspicious Activity Reports (SARs), since the ML triage model now assumes that regulatory reporting duty.
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?