A risk system begins aggregating exposures across every desk overnight rather than weekly. What has changed?
Show the answer and explanation
Answer: C. How quickly a concentration becomes visible
Risk aggregation means adding up the exposures of every desk into one view. Two desks holding the same exposure is a problem only once somebody can see it. Moving from weekly to overnight reporting shortens the time a concentration can build up unseen. So what changes is how quickly a concentration becomes visible. It does not change the amount of risk being run, and risk appetite is a decision made by the board, not by how often you measure.
Why the other options are wrong:
A. The level of risk appetite the firm has set - Appetite is a decision taken by the board. Measuring more often does not set it.
B. The total amount of risk the firm is running - Measuring something more often does not change it, though it may change what gets done about it.