CAMS · Question #935
A financial crimes risk appetite statement describes:
The correct answer is C. the level and type of risk the organization is willing to take to meet its objectives. A risk appetite statement defines the specific level and types of risk an organization is willing to accept in pursuit of its objectives, not its methodology, metrics, or program purpose.
Question
A financial crimes risk appetite statement describes:
Options
- Ahow an organization defines Its risk-based approach.
- Bhow an organization determines its key risk and performance indicators.
- Cthe level and type of risk the organization is willing to take to meet its objectives
- Dthe purpose of an organization's financial crimes compliance program.
How the community answered
(23 responses)- A9% (2)
- B4% (1)
- C74% (17)
- D13% (3)
Why each option
A risk appetite statement defines the specific level and types of risk an organization is willing to accept in pursuit of its objectives, not its methodology, metrics, or program purpose.
Defining a risk-based approach describes the compliance methodology and control calibration process, which is guided by the risk appetite statement rather than being the statement itself.
Key risk and performance indicators are measurement tools derived from and aligned to the risk appetite framework, but they are not what the risk appetite statement defines.
A risk appetite statement is a formal, board-level declaration that sets the boundary of acceptable financial crime risk exposure the organization will tolerate while pursuing its business strategy. It provides management with clear parameters within which decisions must remain and serves as the benchmark against which actual risk exposures are evaluated. This distinguishes it from a risk assessment, a compliance program charter, or a set of KPIs, which are all separate instruments.
The purpose of a financial crimes compliance program is typically articulated in a program charter or policy document, which is a separate instrument from the risk appetite statement.
Concept tested: Financial crimes risk appetite statement definition
Source: https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Guidance-risk-based-approach-banking-sector.html
Topics
Community Discussion
No community discussion yet for this question.