Regulatory Compliance & Risk Management Flashcards

What does the term 'inherent risk' mean in the context of enterprise risk management?

Answer: Risk that exists before any mitigating controls are in place

Inherent risk is the level of risk present in a business activity before any controls or mitigation measures are implemented.

Under the Fair Labor Standards Act (FLSA), what is the standard overtime threshold for non-exempt employees?

Answer: More than 40 hours per week

The FLSA requires overtime pay at 1.5 times the regular rate for non-exempt employees who work more than 40 hours in a workweek.

A business wants to reduce its regulatory compliance risk by simplifying its product line. This is an example of which risk response?

Answer: Risk avoidance

Risk avoidance eliminates exposure by exiting or not entering an activity that carries the risk, such as discontinuing a heavily regulated product.

Which federal agency enforces workplace safety and health standards in the United States?

Answer: OSHA

The Occupational Safety and Health Administration (OSHA) enforces federal workplace safety and health regulations.

A risk heat map is most useful for which of the following purposes?

Answer: Visually prioritizing risks by likelihood and impact

A risk heat map plots risks on a matrix of probability versus impact, helping management visually prioritize which risks deserve the most attention.

What is the main goal of a whistleblower protection policy within a compliance program?

Answer: To encourage reporting of violations without fear of retaliation

Whistleblower protection policies create a safe channel for employees to report suspected violations without risking job loss or other retaliation.

Under the Sarbanes-Oxley Act (SOX), who is ultimately responsible for the accuracy of a public company's financial statements?

Answer: The CEO and CFO

SOX Section 302 requires the CEO and CFO to personally certify the accuracy and completeness of the company's financial reports.