CSCP Compliance Programs & Risk Management 2

Question 1

Under SEC Rule 38a-1, what is the primary role of a mutual fund's Chief Compliance Officer (CCO)?

Accepted Answer

Administer the fund's compliance policies and procedures

Answer

Approve all trade executions above a threshold

Answer

Report directly to shareholders on compliance matters

Answer

Conduct independent audits of the fund's financials

Question 2

Which risk management framework, developed by COSO, is most widely referenced in securities compliance programs for enterprise-wide risk assessment?

Accepted Answer

COSO ERM Framework

Answer

ISO 31000

Answer

NIST Cybersecurity Framework

Answer

Basel III Accord

Question 3

A broker-dealer's written supervisory procedures (WSPs) must be reviewed at minimum how frequently under FINRA rules?

Accepted Answer

Annually

Answer

Quarterly

Answer

Semi-annually

Answer

Every three years

Question 4

What is 'residual risk' in the context of a securities compliance risk assessment?

Accepted Answer

Risk remaining after controls and mitigating measures are applied

Answer

Risk that cannot be quantified in monetary terms

Answer

Risk arising from third-party vendors only

Answer

The highest-rated risk before any controls are implemented

Question 5

Which element is NOT typically required in a broker-dealer's annual compliance report to senior management?

Accepted Answer

A detailed audit of each registered representative's trades

Answer

Assessment of the adequacy of the compliance program

Answer

Identification of material compliance matters

Answer

Recommendations for changes to the compliance program

Question 6

In a compliance risk matrix, 'likelihood' combined with 'impact' is used to determine which of the following?

Accepted Answer

The risk rating or priority score for each identified risk

Answer

The cost of implementing controls

Answer

The timeline for regulatory examination

Answer

The number of compliance staff required

Question 7

A firm's compliance program fails to detect a pattern of unsuitable recommendations due to gaps in supervisory review. This scenario best illustrates which type of compliance failure?

Accepted Answer

Control environment deficiency

Answer

Operational risk crystallization

Answer

Market risk breach

Answer

Liquidity risk event