Compliance In Risk Management Essay

Part 1 (a)

Compliance function in every financial institution is to ensure all act in accordance with the rules. This ensures orderliness and reduces overall systemic vulnerability. It shows the transparency of business, protecting investors and employees. With a strong and independent compliance, it uplifts the integrity and reputation of the bank. An independent compliance identifies, assesses, advices on, monitors and provides report. Effective compliance function will stand on the first line to act and asses on compliance matters as a defense against every possible risk and might lead to financial crimes. The importance of compliance function in a bank ensures that the rules and regulations can take effect parallel by legislators, regulators,

• Repeat the process.

Effective Compliance Risk Management (CRM) starts with three line of defence consist of identify, measures, manage and mitigate and testify the control to the risk. – refer appendix B

Compliance functions come in place by conducting compliance process on a proactive basis and designs policies and procedures clearly defined and consistent with the nature and complexity of a bank activities. The cycle for risk management information of the objectives and targets starts from the board down to business unit management, department heads and lastly department’s project. Consequently, the flow moves back to from ground to report the risk management information independent and assurance. – refer appendix C

Risk is the threat to an even to achieve business objective. By implementing of Risk Based Approach (RBA) to Risk Management of identifying risk. E.g. type of risk is it inherent risk or residual risk.

In the overall context, ERM framework can be addressed by effective CRM when compliance functions fits to adequate management information and systems that provide management with timely reports such as training, effective complaint channel and