CRA Regulatory Compliance & Ethical Standards 3

Question 1

Which U.S. regulation prohibits banking entities from engaging in proprietary trading and restricts their investments in hedge funds and private equity funds?

Accepted Answer

Volcker Rule (Dodd-Frank Section 619)

Answer

The Volcker Rule, codified in Section 619 of Dodd-Frank, restricts banks from proprietary trading and limits investments in covered funds.

Question 2

An organization's code of ethics should be reviewed and updated at a minimum:

Accepted Answer

Annually or when significant business or regulatory changes occur

Answer

Best practice requires annual review of the code of ethics to ensure alignment with current regulations, business activities, and stakeholder expectations.

Question 3

Under COSO's Integrated Framework, 'tone at the top' is most directly associated with which component?

Accepted Answer

Control Environment

Answer

The Control Environment component encompasses leadership's commitment to integrity and ethical values, collectively referred to as 'tone at the top.'

Question 4

The FFIEC's guidance on IT risk management primarily addresses which type of institution?

Accepted Answer

Federal and state-chartered financial institutions

Answer

The Federal Financial Institutions Examination Council (FFIEC) issues guidance applicable to federally supervised banks, thrifts, and credit unions.

Question 5

A risk architect is asked to sign off on a model that has not been independently validated. The MOST appropriate response is to:

Accepted Answer

Refuse to sign off and escalate the lack of validation to senior management

Answer

Model risk management standards require independent validation; signing off without it would violate ethical and professional obligations and should be escalated.

(CRA) Certified Risk Architect Practice Test

(CRA) Certified Risk Architect Practice Test

CRA Regulatory Compliance & Ethical Standards 3