CCM Risk Management and Compliance 5

Question 1

Anti-money laundering (AML) programs require financial institutions and certain businesses to file a Suspicious Activity Report (SAR) when:

Accepted Answer

Transactions are suspected to involve proceeds of illegal activity

Answer

SARs must be filed when a firm knows, suspects, or has reason to suspect that a transaction involves funds derived from illegal activity or is designed to evade reporting requirements.

Question 2

A 'black swan' event in risk management refers to:

Accepted Answer

An extremely rare, high-impact event that is difficult to predict in advance

Answer

A black swan is a rare, outlier event with massive impact that defies conventional prediction, as coined by Nassim Taleb.

Question 3

The 'tone at the top' concept in compliance refers to:

Accepted Answer

Senior leadership's visible commitment to ethical conduct setting the cultural standard for the organization

Answer

Tone at the top means that senior executives model ethical behavior and prioritize compliance, which cascades through the entire organizational culture.

Question 4

A contractual 'indemnification' clause requires one party to:

Accepted Answer

Compensate or hold harmless the other party for specific losses or liabilities

Answer

An indemnification clause obligates one party to compensate the other for losses, damages, or liabilities arising from specified events or breaches.

Question 5

Risk scenarios involving interconnected failures across multiple systems or parties are known as:

Accepted Answer

Systemic or cascading risks

Answer

Systemic or cascading risks describe situations where a failure in one component triggers failures across connected systems, amplifying overall impact.

(CCM) Certified Cash Manager Practice Test

(CCM) Certified Cash Manager Practice Test

CCM Risk Management and Compliance 5