Banking · Risk Governance and RAS
Within a bank's risk governance framework, which of the following best defines the primary role of the Board of Directors in relation to the Risk Appetite Statement (RAS)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The Board delegates the entire authority for setting and modifying risk appetite to the external auditors to maintain independent oversight.
- 2The Board must approve the RAS and ensure it is consistently aligned with the bank's strategy, capital plans, and overall risk capacity.✓
- 3The Board's role is primarily reactive, focusing on reviewing risk reports only after a significant breach of internal limits has been reported by management.
- 4The Board is responsible for the day-to-day execution of risk management activities and transaction-level monitoring within individual business lines.
Correct answer
The Board must approve the RAS and ensure it is consistently aligned with the bank's strategy, capital plans, and overall risk capacity.
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