Question

A financial services firm recently paid a substantial regulatory fine after failing to report suspicious transactions within mandated timeframes. In response, the board directs the risk function to review the enterprise's stated tolerance for compliance-related process failures. Which action best reflects a sound governance approach to setting the revised risk tolerance?

Accepted Answer

Define quantified tolerance thresholds for reporting timeliness that align with legal deadlines and the board's approved risk appetite

Answer

Set tolerance for compliance breaches to zero across all processes to demonstrate commitment to regulators

Answer

Delegate the tolerance decision to first-line compliance analysts who process the transactions daily

Answer

Keep the existing tolerance unchanged since the fine was a one-time event unlikely to recur