Question

True or False: in order to override a risk grade computed value, you must add comments in order for it to be saved

Answer 1

The statement is true; adding comments when overriding a risk grade computed value is typically required to provide a rationale for the change and ensure an audit trail for compliance purposes.

Step-by-step explanation:

The statement is True: to override a risk grade computed value, you typically must add comments in order for it to be saved. This practice is part of risk management processes in financial institutions and corporations, where risk grades are used to assess credit risk or other types of financial risks associated with clients or investments. Adding comments is a critical step in the risk override process because it provides a rationale for why the original risk grade computed by the system should be modified. This is crucial for audit trails and compliance purposes. It ensures that any changes in the risk assessment are transparent, justified, and can be reviewed by other parties such as internal auditors or regulatory authorities.

For example, if the computed risk grade does not account for recent positive changes in a borrower's creditworthiness, an analyst might override the system's grade. When doing so, the analyst would need to provide detailed comments explaining the reason for this override, including references to supporting documents or analyses that substantiate the revised grade. Risk overrides without adequate justification can lead to compliance issues and can undermine the integrity of the risk assessment process, which is why comments are generally required to capture the reasoning behind any changes to computed values.

Answer 2

Whether or not you must add comments to save an override of a risk grade computed value depends on the specific procedures of a financial institution or business. Common practice requires justification for audit and accountability purposes, but it can vary by organization.

Step-by-step explanation:

The statement 'In order to override a risk grade computed value, you must add comments in order for it to be saved' is contingent on the specific business practices and systems in place at a financial institution or company. Typically, risk grades are calculated through an established methodology that incorporates various risk factors. When someone overrides a system-generated risk grade, it usually requires an explanation to maintain an audit trail and ensure accountability. Therefore, most financial institutions and businesses with risk management processes will require an override to be accompanied by documented comments or justification. This practice ensures that any deviations from the standard model are both transparent and traceable.

That said, internal policies can differ greatly from one organization to another, and while this practice is common, it is not a universal rule applicable to every circumstance. It is crucial to refer to the specific protocols and compliance regulations of your institution or the software system in use to determine the exact requirements when overriding computed values.