Why Reporting Noncompliance Risks to Senior Management is Crucial
Question
An organization has detected potential risk emerging from noncompliance with new regulations in its industry.
Which of the following is the MOST important reason to report this situation to senior management?
Answers
Explanations
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A. B. C. D.A.
The correct answer is A. The risk profile needs to be updated.
Explanation:
Noncompliance with new regulations in an organization's industry can lead to potential risks that can impact the organization's operations, finances, reputation, and legal status. Senior management needs to be informed of this situation because it is their responsibility to ensure that the organization operates within the laws and regulations that govern its industry. Reporting the situation to senior management enables them to take appropriate action to address the risk and prevent any potential harm to the organization.
Option B suggests that an external review of the risk needs to be conducted. While an external review may provide additional insights and recommendations, it is not the most important reason to report the situation to senior management. The first step is to update the risk profile of the organization to reflect the potential risks emerging from noncompliance with new regulations.
Option C suggests that specific monitoring controls need to be implemented. While monitoring controls are necessary to detect and mitigate risks, they are not the most important reason to report the situation to senior management. The first step is to update the risk profile of the organization to reflect the potential risks emerging from noncompliance with new regulations.
Option D suggests that a benchmark analysis needs to be performed. While a benchmark analysis may provide useful information, it is not the most important reason to report the situation to senior management. The first step is to update the risk profile of the organization to reflect the potential risks emerging from noncompliance with new regulations.
In summary, updating the risk profile is the most important reason to report the situation to senior management because it provides them with the necessary information to make informed decisions on how to address the potential risks and ensure compliance with new regulations.
