CRCM EXAM - COMPLIANCE RISK
MANAGEMENT QUESTIONS &
VERIFIED CORRECT
Inherent Risk - correct answer ✔✔Risk before controls are applied
Residual Risk - correct answer ✔✔Risk after controls are applied
Mitigation strategies for managing compliance risk - correct answer ✔✔Predictive and detective
automated and manual
Risk measurement - correct answer ✔✔Technique for determining whether risks are controlled
to a point within management's tolerance for the risk
Formalized risk assessments - correct answer ✔✔Assessment of inherent risk, residual risk,
quantity and quality of risk, as well as trends and direction
Three lines of defense - correct answer ✔✔1st line - Business unit level
2nd line - governance oversight
3rd - internal or External audit
Compliance management system - correct answer ✔✔The banks framework to manage
regulatory compliance responsibilities
Elements for Mitigating Compliance Risk - correct answer ✔✔1. Written Program
2. Research and interpret regulations
,3. Testing the program and performance
4. Coordination of Regulatory Exams
5. Leadership of Compliance training programs
6. Advising internal partners
Written Compliance Program - correct answer ✔✔A comprehensive document summarizing key
components of the CMS including roles & responsibilities and compliance related P & P
Change Management Process - correct answer ✔✔Process to:
1. Research regulatory questions
2. Rank solutions as low, moderate or high
3. Track regulatory proposals
4. Implement final regulatory rules
Risk Assessment components - correct answer ✔✔1. Identify risks
2. Measure risk of non-compliance through inherent and residual risks
3. Document controls
4. Monitor risks to ensure appropriate management
5. Report risks
6. Independently evaluate risks
Key Risk Indicators - correct answer ✔✔Changes to:
1. Products and services
2. Systems and automation status
3. P & P
4. Transaction volume & size
, 5. Personnel issues
6. Management experience
7. Dependences on other departments
8. Size & complexity of the bank's operations
9. Locations of branches & affiliates
Key performance indicators - correct answer ✔✔1. Fines & penalties
2. Customer complaints
3. Regulatory criticism from regulator or internal or external auditors
4. Contracts & service level agreement violations
Risk ranking - correct answer ✔✔1. Establish the exposure and likelihood of each identified
compliance risk at the inherent and residual levels
2. Establish a risk map by ranking the risks by their combined exposure and likelihood rankings
Exposure - correct answer ✔✔The extent of potential damage
Likelihood - correct answer ✔✔The probability that an event will occur and the potential
damage will take place
Risk trend - correct answer ✔✔The direction of risk and probable change to risk over the next
12 months
Risk dependencies - correct answer ✔✔Other areas of the bank or other external parties that
the business unit must rely on to control risk
Subprime borrowers - correct answer ✔✔Borrowers with weekend credit histories or reduced
repayment capacity
MANAGEMENT QUESTIONS &
VERIFIED CORRECT
Inherent Risk - correct answer ✔✔Risk before controls are applied
Residual Risk - correct answer ✔✔Risk after controls are applied
Mitigation strategies for managing compliance risk - correct answer ✔✔Predictive and detective
automated and manual
Risk measurement - correct answer ✔✔Technique for determining whether risks are controlled
to a point within management's tolerance for the risk
Formalized risk assessments - correct answer ✔✔Assessment of inherent risk, residual risk,
quantity and quality of risk, as well as trends and direction
Three lines of defense - correct answer ✔✔1st line - Business unit level
2nd line - governance oversight
3rd - internal or External audit
Compliance management system - correct answer ✔✔The banks framework to manage
regulatory compliance responsibilities
Elements for Mitigating Compliance Risk - correct answer ✔✔1. Written Program
2. Research and interpret regulations
,3. Testing the program and performance
4. Coordination of Regulatory Exams
5. Leadership of Compliance training programs
6. Advising internal partners
Written Compliance Program - correct answer ✔✔A comprehensive document summarizing key
components of the CMS including roles & responsibilities and compliance related P & P
Change Management Process - correct answer ✔✔Process to:
1. Research regulatory questions
2. Rank solutions as low, moderate or high
3. Track regulatory proposals
4. Implement final regulatory rules
Risk Assessment components - correct answer ✔✔1. Identify risks
2. Measure risk of non-compliance through inherent and residual risks
3. Document controls
4. Monitor risks to ensure appropriate management
5. Report risks
6. Independently evaluate risks
Key Risk Indicators - correct answer ✔✔Changes to:
1. Products and services
2. Systems and automation status
3. P & P
4. Transaction volume & size
, 5. Personnel issues
6. Management experience
7. Dependences on other departments
8. Size & complexity of the bank's operations
9. Locations of branches & affiliates
Key performance indicators - correct answer ✔✔1. Fines & penalties
2. Customer complaints
3. Regulatory criticism from regulator or internal or external auditors
4. Contracts & service level agreement violations
Risk ranking - correct answer ✔✔1. Establish the exposure and likelihood of each identified
compliance risk at the inherent and residual levels
2. Establish a risk map by ranking the risks by their combined exposure and likelihood rankings
Exposure - correct answer ✔✔The extent of potential damage
Likelihood - correct answer ✔✔The probability that an event will occur and the potential
damage will take place
Risk trend - correct answer ✔✔The direction of risk and probable change to risk over the next
12 months
Risk dependencies - correct answer ✔✔Other areas of the bank or other external parties that
the business unit must rely on to control risk
Subprime borrowers - correct answer ✔✔Borrowers with weekend credit histories or reduced
repayment capacity
