Explanation:
Compliance risk is defined as the risk of legal or regulatory sanctions, material financial loss, or loss to reputation a bank may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory organization standards, and codes of conduct applicable to its banking activities. Option A directly relates to a violation of established legal guidelines (labor laws), therefore it is considered a compliance risk. Option B is reputational risk, while Options C and D relate to operational or execution risks.
Ultimate access to all questions.
Q.4 A bank based in Texas, USA, is considering outsourcing its human resource activities from an HR agency. Its risk management team is considering all potential risks that could arise from this arrangement, particularly compliance risks. Which of the following would qualify as a compliance risk?
A
Advertising jobs without regard to existing labor laws.
B
Negative public opinion because of poor performance of outsourced activities.
C
Acceptance of fake academic documents.
D
Delays in service delivery.
No comments yet.