CCEP Third-Party Risk Management 3

Question 1

What is the role of senior management and the board with respect to third-party risk management?

Accepted Answer

To provide governance oversight, set tone from the top, and ensure adequate TPRM resources

Answer

Senior management and the board are responsible for governance-level oversight—setting tone from the top, establishing TPRM policy, and ensuring the organization has adequate resources and structure to manage third-party risks.

Question 2

What is 'Know Your Vendor' (KYV) and why is it significant in compliance?

Accepted Answer

A due diligence process for understanding a vendor's identity, ownership, and compliance risk profile

Answer

KYV is a structured due diligence process that involves understanding a vendor's identity, beneficial ownership, business practices, and risk profile to proactively identify compliance risks before and during engagement.

Question 3

When a third party undergoes an acquisition and comes under new ownership, what should the compliance team do?

Accepted Answer

Conduct a reassessment of the third party under its new ownership to identify any new or changed risks

Answer

A change in ownership can materially alter a third party's risk profile, so reassessing the relationship under the new ownership structure is necessary to identify any new compliance risks or exposures.

Question 4

Which of the following best describes a risk-based approach to third-party management?

Accepted Answer

Focusing more intensive due diligence and monitoring resources on higher-risk third parties

Answer

A risk-based approach allocates compliance resources proportionally, directing more intensive scrutiny and ongoing monitoring toward third parties that present higher compliance risks.

Question 5

Under the UK Bribery Act, what is the 'adequate procedures' defense available to companies facing corporate liability for third-party bribery?

Accepted Answer

Demonstrating the company had adequate anti-bribery procedures in place designed to prevent bribery

Answer

The UK Bribery Act's 'adequate procedures' defense allows a company to avoid corporate liability if it can demonstrate it had proportionate, risk-based anti-bribery procedures in place to prevent associated persons from engaging in bribery.

(CCEP) Certified Compliance and Ethics Professional Practice Test

(CCEP) Certified Compliance and Ethics Professional Practice Test

CCEP Third-Party Risk Management 3