Module: | MODULE B: RISK MANAGEMENT
Q341: Consider the following statements regarding the Risk Management Committee (RMC) of the Board:
1. The RMC is a direct board-level committee responsible for evaluating the overall risk profile of the bank and defining broad risk mitigation strategies.
2. The RMC strictly operates as a subordinate sub-committee of the Asset Liability Management Committee (ALCO) and reports directly to the Chief Dealer.
3. The RMC plays a critical role in reviewing the bank's Internal Capital Adequacy Assessment Process (ICAAP) to ensure sufficient capital against market risk exposures.
2. The RMC strictly operates as a subordinate sub-committee of the Asset Liability Management Committee (ALCO) and reports directly to the Chief Dealer.
3. The RMC plays a critical role in reviewing the bank's Internal Capital Adequacy Assessment Process (ICAAP) to ensure sufficient capital against market risk exposures.
✅ Correct Answer: A
The correct answer is A. Statement 1 is correct: The Risk Management Committee (RMC) is a top-tier Board-level committee structurally mandated to oversee the institution's comprehensive risk profile, including market, credit, and operational risks.
Statement 3 is correct: A critical statutory function of the RMC is to review and approve the Internal Capital Adequacy Assessment Process (ICAAP) to ensure the bank maintains adequate capital buffers against extreme market risk exposures.
Statement 2 is incorrect due to a severe hierarchical error.
The RMC is a Board committee and sits at the top of the risk governance structure.
ALCO (Asset Liability Management Committee) is an executive-level committee consisting of senior management (like the CEO and CFO) that reports up to the RMC/Board.
The RMC certainly does not report to the Chief Dealer, who operates deep within the front-office treasury.
Statement 3 is correct: A critical statutory function of the RMC is to review and approve the Internal Capital Adequacy Assessment Process (ICAAP) to ensure the bank maintains adequate capital buffers against extreme market risk exposures.
Statement 2 is incorrect due to a severe hierarchical error.
The RMC is a Board committee and sits at the top of the risk governance structure.
ALCO (Asset Liability Management Committee) is an executive-level committee consisting of senior management (like the CEO and CFO) that reports up to the RMC/Board.
The RMC certainly does not report to the Chief Dealer, who operates deep within the front-office treasury.