Which of the following statements is true about compliance risk?

Question

Options

• ACompliance risk can be tolerated when fines cost less than controls.
• BCompliance risk is just another risk that needs to be measured.
• CCompliance risk can never be tolerated.
• DCompliance risk can be tolerated when it is optional.

• A
  3% (1)
• B
  86% (25)
• C
  10% (3)

Explanation

Compliance risk is simply one category within an organization's broader risk landscape, meaning it must be identified, assessed, and managed like any other risk - making B correct. Option A is wrong because compliance risk cannot be reduced to a cost-benefit calculation; legal and regulatory obligations exist regardless of fine amounts. Option C overstates the case - "never tolerated" is too absolute, since some low-level compliance gaps may be accepted with proper documentation and controls. Option D is a trap: "optional" compliance doesn't exist in a meaningful sense, since regulations are external requirements, not choices.

Memory tip: Think of compliance risk as a type of risk, not a special risk - it lives on the same risk register as operational or financial risk and gets the same treatment: measure it, manage it, report it.

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