CAIIB · ABM · Chapter 4

Framework for Identification of Compliance Issues and Compliance Risks

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Q

Define compliance risk per BCBS 2005 and RBI adoption.

A

Risk of legal/regulatory sanctions, material financial loss, and reputational damage from non-compliance.

Q

Name three loss heads arising from single compliance failure.

A

Legal/regulatory sanctions, material financial loss, reputational loss.

Q

What is inherent risk in compliance context?

A

Risk absent any security controls; function of threats and vulnerabilities.

Q

Define residual risk.

A

Probability of loss remaining after security measures implemented; function of inherent and control risk.

Q

State four non-negotiables for RBI-mandated compliance function.

A

Independent, resourced; clearly defined responsibilities; subject to internal audit review; core risk activity, not outsourced.

Q

Who does CCO report to per RBI Master Direction?

A

MD & CEO directly; parallel access to Audit Committee of Board (ACB).

Q

List three BFSI mega-trends creating compliance risks.

A

Geopolitical shifts, heightened regulatory expectations, data protection governance.

Q

What is due diligence in compliance context?

A

Demonstrating effective implementation and maintenance of management systems meeting obligations.

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