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Exam SCR topic 1 question 20 discussion

Actual exam question from GARP's SCR
Question #: 20
Topic #: 1
[All SCR Questions]

As climate change poses new financial risks to a central bank’s monetary policy operations, the bank decides to adapt operations with NGFS guidelines. Because the central bank does not include climate change in supervision practices, the bank consults subject matter experts (SMEs) to develop a proposal for central bank action on climate change. After completing the risk assessment, SMEs recommend the bank incorporate microprudential and macroprudential measures to embed climate change into supervision practices.
Which action are SMEs likely to recommend?

  • A. Conduct climate stress tests with standardized policy scenarios and feedback loops as a microproduential measure.
  • B. Increase internal resources and establish an external review process for climate risk integration as a macroprudential measure.
  • C. Adhere to disclosure best practice when integrating climate risk by following TCFD disclosure recommendations as a microprudential measure.
  • D. Implement the widely adopted macroprudential measure of a procyclical capital buffer to increase equity capital during periods of carbon-intensive credit.
Show Suggested Answer Hide Answer
Suggested Answer: C 🗳️
by goodforme at March 5, 2023, 2:58 a.m.

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goodforme
Highly Voted 1 year, 8 months ago
Selected Answer: C
Microprudential Measures : on disclosure, the Bank expects firms to consider implementing disclosures on climate risk beyond mandatory requirements, suggesting TCFD rec-ommendations as a guideline.
upvoted 10 times
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Ramki_Looking_For_Answerkey
Most Recent 7 months ago
As per GARP question bank, it should be A
upvoted 1 times
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ShawnLearning
1 year ago
SCR Book, Chapter 4.1.1, p.85: "Stress tests are another micro-and macroprudential tool at the disposal of central banks. " Why is A incorrect?
upvoted 1 times
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Shweta_l
1 year, 1 month ago
The answer should be C.
upvoted 1 times
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MatMat2023
1 year, 1 month ago
SME recommendation is about both micro AND macro measures. None of the answers is correct. C is the most suitable because central banks and regulators are moving towards the direction of adopting TCFD disclosure recommendations, but they are about micro and NOT macro
upvoted 1 times
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xdude
1 year, 1 month ago
B is micro prudential measure and not macro. So B is wrong. C is the most appropriate one
upvoted 2 times
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Dunjeon_Master
1 year, 7 months ago
C is correct
upvoted 1 times
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Karnitschnig
1 year, 7 months ago
Selected Answer: C
This was poorly worded. B is not macro
upvoted 1 times
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A2240
1 year, 7 months ago
Review is the most important part of supervision
upvoted 1 times
...

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