Which one of the following four approaches should the management choose to achieve this strategic goal?

AlphaBank’s management is evaluating how changes in its business environment could materially impact risk categories. As a result, bank’s management decides to implement the structure, which facilitates the discussion in an integrative context, spanning market, credit, and operational risk factors, and encourages transparency and communication between risk disciplines.

Which one of the following four approaches should the management choose to achieve this strategic goal?
A . Regulatory risk management approach
B . Enterprise risk management approach
C . Scenario-based risk management approach
D . Taxonomy-based risk management approach

View Answer

Answer: B

Explanation:

To achieve a strategic goal that facilitates discussion in an integrative context spanning market, credit, and operational risk factors, and encourages transparency and communication between risk disciplines, AlphaBank’s management should choose the enterprise risk management (ERM) approach. ERM integrates all types of risks and promotes a comprehensive risk management culture within the organization.

References: Enterprise risk management approach as described in Financial Risk and

Regulation documents.