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Aggregation of risks is somewhat new to banks in India. While some banks have started thinking in that direction by trying to put in place integrated limit frameworks and integrated risk policies, as well as using CBS solutions for technological integration, the effort required is beyond such requirements. Risk aggregation would mean aggregating the individual risk measures to decide the most appropriate asset class that would contain the risk to the desired level dictated by the risk appetite. Capital allocation (about how much) would be based on such strategies...........

1. Most banks are yet to conceptualize the same in their processes
2. Most banks have already integrated it in their functioning; it is working over the years satisfactorily.
3. Which would in long run prove to be the growth impeding
4. Of risk aggregation which is really a new concept to Indian banks
5. On expected lines of the regulation conditions laid down in the manual of the bank

Correct answer: Most banks are yet to conceptualize the same in their processes

Solution

The passage says risk aggregation is new to Indian banks and that the effort required is still beyond what many banks are doing. The missing line should reinforce that most banks have not yet fully developed this in their systems. Option 1 fits the context and grammar best.

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