COMPLIANCE RISK ASSESSMENT
Compliance risk is your organization’s exposure to the potential consequences for non-compliance. That is, if the business isn’t meeting its regulatory compliance obligations, what sanctions might regulators impose on you? Those sanctions can include monetary penalties, disgorgement of profits gained from improper business conduct, or corrective actions that might be expensive to implement. You would also face legal costs as regulators investigate, plus the potential for civil lawsuits and loss of reputation among your customer base.
A compliance risk assessment, then, measures the gap between what your compliance program does, versus what your compliance program should do to pass muster as an “effective” program in the eyes of regulators. Compliance risk assessment ensures regulatory time management, display competence to regulator, protection of clients and firm and strategic decision making.
The mitigation steps you take reduce your compliance risk until it achieves that goal of effectiveness. Before an organization can mitigate its compliance risk, however, it must conduct a compliance risk assessment
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