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Answer: A weekly firm-wide meeting in which managers of each business unit report their work progress
**Correct Answer: B** **Explanation:** - **Option B** represents a strong element of risk culture because regular firm-wide meetings that include risk reporting promote transparency, accountability, and shared understanding of risk issues across the organization. - **Option A** is inappropriate because startup compensation structures often emphasize aggressive growth over risk management, which is unsuitable for a large financial institution. - **Option C** is problematic because resolving risk violations exclusively within business units can lead to siloed thinking and lack of independent oversight, undermining risk governance. - **Option D** is dangerous because excessive flexibility that accommodates profitable but risky activities can lead to risk control failures and ethical breaches. A strong risk culture requires open communication, consistent application of risk policies, and independent oversight - all supported by regular firm-wide risk reporting mechanisms.
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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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