What is Compliance Risk?
Compliance Risk The risk of legal or regulatory sanctions, material financial loss, or reputational damage an organization may suffer as a result of failing to comply with laws, regulations, codes of conduct, or standards of practice.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Compliance Risk” Used in Practice?
Banks must assess compliance risk related to anti-money laundering laws and report breaches to regulators per Basel III and FATF recommendations.
Certification Exam Relevance
Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Compliance Risk?
The risk of legal or regulatory sanctions, material financial loss, or reputational damage an organization may suffer as a result of failing to comply with laws, regulations, codes of conduct, or standards of practice.
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