CAIIB ABM Module D UNIT 30 MCQ – Compliance Culture and GRC Framework

Correct Answer: B. Prevention or reduction of frauds and compliance failures. A system for reporting wrongdoing helps in stopping improper activities like frauds and failures to comply with rules.

Correct Answer: B. A designated authority to receive and handle reports. Such a policy requires a specific individual or body responsible for dealing with the reported information.

Correct Answer: C. Whistle-blower. This term refers to an individual, typically an insider, who flags potential misconduct within their workplace.

Correct Answer: C. Grave and serious matters. Policies on unethical conduct are intended to cover significant issues, not minor or unsubstantiated concerns.

Correct Answer: B. High-level corruption. Serious matters intended for reporting include significant breaches like corruption or violations of fundamental rights, not minor workplace issues.

Correct Answer: C. Independence and seniority. The individual or group handling reports needs to be unbiased and hold a sufficiently high position to act effectively.

Correct Answer: B. To provide an official internal channel for reporting serious issues. Such a policy establishes a formal internal method for bringing serious concerns to the attention of the appropriate senior level.

Correct Answer: C. Concern about potential negative reactions from colleagues or superiors. Fear of reprisal or negative consequences from others in the organisation can deter reporting.

Correct Answer: C. A culture promoting openness and ethical behaviour. Such a policy helps reinforce values and makes employees feel safer in raising legitimate concerns.

Correct Answer: B. By increasing the perceived risk and potential negative consequences for those contemplating misconduct. Knowing there is a channel for reporting increases the chance of being caught and facing punishment, thus discouraging wrongdoing.

Correct Answer: B. Opportunities for early intervention to prevent larger issues. Early reporting allows for problems to be identified and addressed before they become significant crises.

Correct Answer: B. Difficulty in knowing and understanding what is required. If rules are too complicated, individuals may fail to comply simply because they do not comprehend what is expected of them.

Correct Answer: C. It tends to decrease it. When the perceived burden of compliance is high, people are less inclined to voluntarily follow the rules.

Correct Answer: C. Erosion of trust in regulatory bodies. Rules that appear pointlessly complex or disconnected from real-world objectives can damage confidence in the authorities that create them.

Correct Answer: C. It tends to be lower. Regulations that clash with existing practices or cultural expectations often face lower rates of adherence.

Correct Answer: C. A lack of active checking for compliance. If rules are not actively supervised or checked, people are less likely to follow them.

Correct Answer: B. Their willingness to comply may be reduced. A perception of unfair treatment can lead to resistance and reduced adherence to requirements.

Correct Answer: C. There is a failure in the mechanism designed to discourage rule-breaking. If breaking a rule is highly profitable and unlikely to be detected, the system meant to prevent it is not working effectively.

Correct Answer: B. Wastage of resources on administration and implementation that yield no results. Effort spent on rules that are not followed effectively leads to wasted resources and failed outcomes.

Correct Answer: C. Undermining of other rules and the overall system of regulation. Widespread failure to follow rules can weaken the effectiveness and legitimacy of the entire regulatory framework.

Correct Answer: C. Lack of resources for effective implementation. If there aren’t enough resources or support available, it becomes difficult for individuals and entities to follow the rules correctly.

Correct Answer: C. Failure stemming from not correctly understanding the problem. If the underlying issue or the goal of the rule is misunderstood, the rule itself is unlikely to be effective.

Correct Answer: C. A potential conflict of interest. When the same activities involve both business goals and rule-following, there can be a conflict, which senior leadership’s focus on ethics helps address.

Correct Answer: B. Necessary skills, background, and personal integrity. Individuals in this role need the right qualifications, experience, and personal qualities to perform effectively.

Correct Answer: C. With a formal status. This function should be officially established and recognised within the organisational structure.

Correct Answer: B. To handle local rule requirements within the framework of the overall organisational policy. It needs to be organised to address local rules while still adhering to the main organisational policy.

Correct Answer: C. A clear commitment to promoting ethical values throughout the organisation. Senior leadership’s visible support for honesty and integrity is necessary for the policy to work effectively.

Correct Answer: B. Identifying, documenting, and assessing potential risks related to business activities. This function should actively seek out, record, and evaluate risks before they become problems.

Correct Answer: B. Compliance risks associated with these new activities. Any new business practices or offerings should be evaluated for potential rule-following issues in advance.

Correct Answer: C. Substantial changes in the nature of these connections. Significant alterations in how the organisation interacts with businesses or customers require a forward-looking review for compliance risks.

Correct Answer: C. Increased regulation, more complex operations, and greater demand for accountability. Businesses are facing more rules, their activities are becoming more complicated, and there is more emphasis on proving responsible conduct.

Correct Answer: C. As uncoordinated or isolated activities. When related efforts are not managed together, they are described as disconnected or handled in separate departments or processes.

Correct Answer: C. Repeated work and increased costs. Handling related tasks separately can lead to doing the same thing multiple times and spending more money.

Correct Answer: B. The GRC (Governance, Risk, and Compliance) process. This process provides a framework for integrating and managing these interconnected areas.

Correct Answer: B. Three. A GRC process is composed of three main elements: Governance, Risk Management, and Compliance.

Correct Answer: C. Governance. This is the part that deals with overall direction, control, and how the company manages its exposures to risk.

Correct Answer: C. Because shareholders are more active and regulators are imposing closer checks. Increased pressure from owners and stricter monitoring by rule-making bodies are driving this focus.

Correct Answer: B. Managing risks across the entire organisation and overseeing regulatory issues. Governance includes looking at risks from a company-wide perspective and supervising compliance with rules.

Correct Answer: B. Risk Management. This is the discipline focused on identifying, assessing, and addressing potential problems and uncertainties.

Correct Answer: B. Financial, operational, IT, brand, and reputation risks. The scope of risk management often covers a broad range of potential issues including financial, operational, technology, public perception, and standing.

Correct Answer: B. To make informed choices about the company’s long-term direction. Seeing clearly where the organisation stands regarding risks allows leaders to guide it effectively into the future.

Correct Answer: C. Compliance. This part is about ensuring that all necessary rules and standards are being met.

Correct Answer: B. It needs to become a standard, ongoing process. Organisations find that adhering to rules is not a single event but requires continuous effort and established procedures.

Correct Answer: B. Implementing a streamlined and efficient process for managing all compliance tasks. A smooth and organised approach to handling multiple rule requirements simultaneously is necessary to control costs and reduce risk.

Correct Answer: C. By allowing compliance to be done repeatedly and economically. A well-designed process makes the ongoing task of following rules more efficient and less costly.

Correct Answer: C. An integrated platform for managing strategic and operational risks and combining financial risk information. A GRC solution acts as a single system to handle various types of risks and bring together relevant data.

Correct Answer: C. An enterprise-wide view. Consolidating information allows for understanding risks across all parts of the business.

Correct Answer: B. By using a single, integrated web-based application. GRC solutions can be designed as centralised, online systems to automate operational risk data management.

Correct Answer: B. Data on operational losses, indicators of key risks, and results from risk and control assessments. Information regarding financial losses from operations, metrics indicating potential risk levels, and the outcomes of risk and control evaluations can be consolidated.

Correct Answer: C. Risk Control Self-Assessment (RCSA). This is identified as a common feature in GRC software.

Correct Answer: B. Incident Management. This is presented as a module commonly found in GRC applications.

Correct Answer: C. Issues and Action Plan Module. This type of module is likely dedicated to managing identified problems and the steps taken to address them.

Correct Answer: C. As working in separate, disconnected areas (silos). Handling activities in separate, isolated areas is referred to as managing them in silos.

Correct Answer: B. They may acquire many separate systems for different tasks. Purchasing software for specific needs without an overall plan can result in multiple disconnected systems.

Correct Answer: B. Confusion due to conflicting procedures and documents. Using distinct systems for related tasks can create misunderstandings and inconsistencies in how things are done and recorded.

Correct Answer: C. Costs that escalate significantly due to repeated effort and expense. Keeping many separate software systems running can be very expensive due to the need for repeated tasks and high maintenance costs.

Correct Answer: B. Implementing a unified GRC process using a single system. Bringing the process together and using one system is proposed as a way to overcome the challenges of fragmented management.

Correct Answer: B. It can have a substantial positive effect. Integrating GRC efforts is indicated to significantly improve the overall effectiveness of the organisation.

Correct Answer: B. A “single version of the truth”. An integrated system ensures that everyone accesses the same, consistent, and reliable information.

Correct Answer: B. Costs related to duplicate software, hardware, training, and deployment. Using one system instead of many separate ones avoids the unnecessary expenses of acquiring, setting up, teaching, and rolling out multiple software solutions.

Correct Answer: C. By creating a consistent and reliable set of information available to all. Integrating information ensures that everyone is working from the same, dependable data.

Correct Answer: B. A notable reduction in the expenses related to following rules. A key advantage highlighted is the ability to significantly lower the costs of meeting compliance obligations.

Correct Answer: B. It must be capable of handling a wide range of compliance and risk management tasks. To provide a consistent framework, the software needs to be versatile enough to cover various compliance and risk activities.

Correct Answer: B. A clear commitment to promoting honesty and integrity throughout the organisation. The policy relies on senior leaders demonstrating a strong dedication to ethical values across the entire company.

Correct Answer: B. Implementing comprehensive governance, risk, and compliance initiatives. These pressures are causing organisations to pursue extensive efforts aimed at improving governance, risk management, and compliance.

Correct Answer: C. A growing regulatory environment. An increase in rules and regulations is one of the key drivers pushing organisations towards comprehensive GRC programs.

Correct Answer: C. The interdependence makes uncoordinated initiatives problematic. When risks and controls affect multiple areas, managing them separately becomes difficult and less effective.

Correct Answer: C. Enforcement of rules. An integrated process includes the method of ensuring rules and policies are followed.

Correct Answer: B. To manage and mitigate them through oversight. Governance involves the directional and supervisory activities aimed at controlling and reducing business risks.

Correct Answer: C. Into a coherent process to drive corporate governance. Governance combines these different aspects into a connected system that guides the overall direction of the company’s governance.

Correct Answer: B. Systematically identify, measure, prioritise, and respond to all types of risk. Risk management provides a structured way to deal with potential issues from identification to response.

Correct Answer: B. Visibility into exposure and status. Leaders need a clear view of the potential impact of risks and their current state to make informed decisions.

Correct Answer: B. Industry mandates. Requirements can come from rules specific to the industry the organisation operates in.

Correct Answer: B. A streamlined process is critical to manage them effectively and economically. Dealing with many rules over time requires an efficient method to keep costs down and ensure continued adherence.

Correct Answer: C. To sustain compliance at a lower cost on an ongoing basis. Establishing routine procedures for compliance helps maintain adherence over time more efficiently.

Correct Answer: C. An enterprise-wide view. By combining data, the solution helps create a comprehensive picture of risk across the entire organisation.

Correct Answer: B. Processes for managing this information can be automated through a user-friendly system. A single system allows for automation and ease of use in handling this type of risk data.

Correct Answer: B. Operational loss events, key risk indicators, risk assessment results, and control assessment scores. Data points like details of operational losses, metrics showing risk levels, and the outcomes of risk and control evaluations can be integrated.

Correct Answer: B. Duplication of effort. Using many distinct systems often leads to different parts of the organisation doing the same work repeatedly.

Correct Answer: B. Duplicative and contradictory processes and documentation. Operating with multiple disconnected systems can result in inconsistent procedures and records.

Correct Answer: B. Duplicative software, hardware, training, and rollout costs. Consolidating these initiatives into one system avoids the unnecessary expenses of acquiring, setting up, and managing multiple software instances.

Correct Answer: B. It can dramatically improve effectiveness. Bringing governance, risk, and compliance together in a unified process can significantly enhance how the organisation operates.

Correct Answer: B. A “single version of the truth”. An integrated system ensures that everyone accesses the same, consistent, and reliable information.

Correct Answer: C. It can significantly reduce it. Bringing together and simplifying compliance efforts can lead to substantial cost savings.

Correct Answer: C. A wide spectrum of compliance and risk management requirements. The solution needs broad capabilities to cover diverse activities to ensure a unified approach across the entire organisation.

Correct Answer: C. Control. The GRC process uses control as a method to unify initiatives.

Correct Answer: B. Through balanced scorecards, risk scorecards, and operational dashboards. These tools are mentioned as ways to measure how well the business is doing as part of governance.

Correct Answer: B. Responding to the risks. Once risks are assessed, the process moves to taking action to address them.

Correct Answer: B. Managing exposure. After responding to risks, the ongoing activity is handling the organisation’s vulnerability to those risks.

Correct Answer: C. Sustainability of compliance efforts. Making compliance a routine process ensures it continues effectively over time.

Correct Answer: B. To avoid spiralling costs and increased non-compliance risk. An efficient process is essential to handle many rules concurrently without costs getting out of control and increasing the chance of breaking them.

Correct Answer: C. An enterprise view of risk exposure. Bringing data from different financial risk systems together helps create a comprehensive picture of the organisation’s overall risk vulnerability.

Correct Answer: B. Identification, assessment, response, and monitoring. The integrated view covers the full cycle of managing risks from finding them to keeping track of them.

Correct Answer: B. Internal operational risk information. A GRC solution can automate the handling of data related to risks arising from internal operations.

Correct Answer: C. Comprehensive handling of operational risk information. Bringing these processes together from various locations allows for managing operational risk data in a thorough way.