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Question

Which of the following would have the primary responsibility of understanding the risks run by the bank and ensuring that the risks are appropriately managed?

A MD, CEO of the bank Correct Answer Incorrect Answer
B Board of Directors Correct Answer Incorrect Answer
C Chief compliance officer Correct Answer Incorrect Answer
D Internal Ombudsman Correct Answer Incorrect Answer
E Shareholders Correct Answer Incorrect Answer

Solution

The primary responsibility of understanding the risks run by the bank and ensuring that the risks are appropriately managed should clearly be vested with the Board of Directors. The Board should set risk limits by assessing the bank’s risk and risk bearing capacity. At organisational level, overall risk management should be assigned to an independent Risk Management Committee or Executive Committee of the top Executives that reports directly to the Board of Directors.

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