PRMIA Exam 8020 Topic 8 Question 8 Discussion

Step 1: Definition of Material Customer Detriment

Material customer detriment refers to service disruptions that cause financial loss, inability to access essential services, or significant hardship.

PRMIA and UK FCA Operational Resilience Standards define 'significant harm' as going beyond inconvenience to include monetary or operational distress.

Step 2: Why Option D is Correct

Significant harm occurs when customers face tangible financial or service losses, not just reputational inconvenience.

Regulatory frameworks (e.g., Basel, FCA, PRMIA) require banks to protect customers from material disruptions.

Step 3: Why the Other Options Are Incorrect

Option A ('Low threshold, any complaint') Incorrect because not all complaints indicate material detriment.

Option B ('Inconvenience and reputational damage') Incorrect because true material harm is more than just inconvenience.

Option C ('Financial system resilience') Incorrect because this describes systemic financial stability, not customer impact.

PRMIA Risk Reference Used:

PRMIA Operational Resilience Framework -- Defines material customer detriment.

UK FCA Operational Resilience Guidelines -- Requires firms to minimize severe harm to customers.

Final Conclusion:

Material customer detriment involves actual financial hardship, not just inconvenience, making Option D the correct answer.