medium · FRM Part 2 Operational Risk
A bank's Risk Appetite Framework (RAF) includes a cascade of limits.
Which sequence correctly represents the hierarchy from the broadest constraint to the most granular operational boundary?
- Risk Capacity rightarrow Risk Appetite rightarrow Risk Limits.
- Risk Tolerance rightarrow Risk Profile rightarrow Risk Appetite.
- Risk Limits rightarrow Risk Appetite rightarrow Risk Capacity.
- Risk Profile rightarrow Risk Capacity rightarrow Risk Limits.
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