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CFA® Level I question of the day

7 October 2026 · Portfolio Management

Why must risk governance be independent of the risk-taking units?

Show the answer and explanation

Answer: C. Because a function reporting to those it monitors cannot constrain them

The independence is structural rather than a matter of the individuals' integrity.

Why the other options are wrong:

  • A. Because independence is required by accounting standards — Accounting standards govern financial reporting, not risk reporting lines.
  • B. Because it reduces the cost of the function — It generally raises the cost. Independence is bought for the credibility of the constraint.

Medium · PM.7.a · learning outcome: Explain what a risk management framework involves and how risk is governed

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Notes, formulas and a worked question for every learning outcome are on the Portfolio Management page, with the whole CFA Level I syllabus alongside.

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