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Observations and Developments in Risk Appetite Frameworks and IT Infrastructure

This reading is a part of the syllabus for FRM Part 2 Exam in the section ‘Operational and Integrated Risk Management’.

The report summarizes the efforts of two SSG working groups to assess the progress that financial institutions have made in developing risk appetite frameworks and building robust information technology infrastructures.

The observations in this report indicate that while most firms have made progress in developing risk appetite frameworks and begun multiyear projects to improve IT infrastructure, financial institutions have considerably more work to do in order to strengthen these practices. In particular, it is observed that aggregation of risk data remains a challenge for institutions, despite its criticality to strategic planning, decision making, and risk management.

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