Explanation:
Correct Answer: B
Explanation:
Option B is correct because regular firm-wide meetings where business unit managers report progress promote transparency, accountability, and information sharing - all key elements of a strong risk culture.
Option A is incorrect because using a startup company's compensation structure for a large financial institution would likely be inappropriate. Startups often have different risk appetites and compensation structures than established financial institutions.
Option C is incorrect because resolving risk control violations exclusively within business units creates silos and undermines centralized risk oversight, which is essential for strong risk culture.
Option D is incorrect because a "flexible" risk management style that accommodates profitable activities regardless of risk undermines risk discipline and can lead to excessive risk-taking.
A strong risk culture requires clear communication, accountability, and consistent application of risk principles across the organization.
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An ERM manager at a large financial institution is meeting with a risk consultant on the subject of improving the firm's risk culture framework. The risk consultant uses examples to describe the elements of a strong risk culture. Which of the following is appropriate for the consultant to mention as an example?
A
A compensation plan that is developed based on the business structure of a startup company in the industry
B
A weekly firm-wide meeting in which managers of each business unit report their work progress
C
A company culture that encourages resolutions of risk control violations to be made exclusively within business units
D
A flexible risk management style that more easily accommodates activities that are likely to result in a profit
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