A compliance officer identifies a potentially significant risk in a popular financial product. Further investigation reveals there is no mitigating control.
Which course of action should the compliance officer take?
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A. B. C. D.D
Sure, I'd be happy to help explain each answer option and the best course of action for the compliance officer.
A. Launch a long-term project to remediate the control deficiency: This option suggests that the compliance officer should initiate a long-term project to address the control deficiency that has been identified. While it is important to address control deficiencies in financial products, launching a long-term project may not be the most efficient or effective course of action in this scenario. If the risk is significant, waiting for a long-term project to be completed could put the financial institution at risk in the meantime.
B. Note the risk and address it during the next round of policy and procedure review: This option suggests that the compliance officer should take note of the risk and wait until the next round of policy and procedure review to address it. However, if the risk is significant, waiting until the next review cycle may not be appropriate. In addition, this option does not provide any temporary mitigation plan, which could put the financial institution at risk in the meantime.
C. Immediately cease providing the product and only offer it after effective permanent mitigation is implemented: This option suggests that the compliance officer should immediately cease providing the financial product until effective permanent mitigation is implemented. This option is appropriate if the risk is significant and there are no temporary mitigation measures that can be implemented. However, it could have a negative impact on the financial institution's revenue if the product is a popular one.
D. Implement a temporary mitigation plan that enables effective management of the risk until a permanent plan can be developed: This option suggests that the compliance officer should implement a temporary mitigation plan that enables effective management of the risk until a permanent plan can be developed. This option is appropriate if the risk is significant and there are no permanent mitigation measures that can be implemented immediately. A temporary mitigation plan would allow the financial institution to continue offering the popular financial product while addressing the identified risk. This option also acknowledges the importance of developing a permanent solution in the long term.
In conclusion, the best course of action for the compliance officer would be to implement a temporary mitigation plan that enables effective management of the risk until a permanent plan can be developed. This option would allow the financial institution to continue offering the financial product while addressing the identified risk, without having to launch a long-term project or immediately cease providing the product. It also acknowledges the importance of developing a permanent solution in the long term.