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Exam SCR topic 1 question 8 discussion

Actual exam question from GARP's SCR
Question #: 8
Topic #: 1
[All SCR Questions]

A climate risk consultant advises an Eastern European central bank. In response to regulatory changes, the bank will incorporate climate-related risks into bank policies. The consultant writes a summary on how central banks incorporated climate-related risks into policies. The summary highlights the Bank of England (BoE) example to demonstrate how the BoE integrated climate-related risks within the bank supervisory scope.
Which of the following BoE practices will the consultant recommend?

  • A. Integrate climate-related risks into bank monetary policy before attempting to integrate climate into other areas of bank operations.
  • B. Obligate firms to allocate responsibility for climate-related risks using a bottom-up approach where the risk team assesses climate risks while the board of directors approves or denies.
  • C. Require banks and insurers include all material exposures relating to financial risks from climate change under capital adequacy and solvency assessments.
  • D. Adopt a policy that requires firms to submit climate risk disclosures that precisely follow NGFS guidelines.
Show Suggested Answer Hide Answer
Suggested Answer: C 🗳️
by qingyang111000 at April 11, 2024, 1:27 p.m.

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linaSCR
2 months, 2 weeks ago
Selected Answer: C
B has a misleading definition of "bottom up" to my opinion. So I choose C
upvoted 1 times
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qingyang111000
2 months, 2 weeks ago
Selected Answer: C
CASE STUDY: BANK OF ENGLAND
upvoted 1 times
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mr_amo
2 months, 3 weeks ago
The correct answer is D. Pages 89 and 90 of the book. Supervisors expected companies for using NGFS best practices and adopt them.
upvoted 1 times
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qingyang111000
2 months, 3 weeks ago
Selected Answer: B
Microprudential Measures : Regarding governance, the BoE requires firms to allocate responsibility for climate-related risks to a designated executive under UK rules that allow senior executives to be held responsible.
upvoted 1 times
qingyang111000
2 months, 3 weeks ago
Should be C, “ On risk management, the BoE requires banks and insur-ers, under their own capital adequacy and solvency assessments, to include “all material exposures” relat-ing to the financial risks from climate change.”
upvoted 1 times
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