PRMIA Exam 8010 Topic 1 Question 12 Discussion

Actual exam question for PRMIA's 8010 exam

Question #: 12
Topic #: 1

A risk management function is best organized as:

Aintegrated with the risk taking functions as risk management should be a pervasive activity carried out at all levels of the organization.

Breport independently of the risk taking functions

Creporting directly to the traders, as to be closest to the point at which risks are being taken

Da part of the trading desks and other risk taking teams

Show Suggested Answer

Suggested Answer: B

The point that this question is trying to emphasize is the independence of the risk management function. The risk function should be segregated from the risk taking functions as to maintain independence and objectivity.

Choice 'd', Choice 'c' and Choice 'a' run contrary to this requirement of independence, and are therefore not correct. The risk function should report directly to senior levels, for example directly to the audit committee, and not be a part of the risk taking functions.

by Ozell at May 26, 2022, 12:25 PM

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