CRISC Certified in Risk and Information Systems ControlGovernanceEasy
A multinational corporation is expanding its operations into a new region with a highly diverse legal and regulatory landscape. The board of directors is concerned about ensuring compliance across all new jurisdictions while maintaining operational efficiency. Which of the following is the MOST effective approach to manage this challenge?
- AImplement a centralized compliance department to review all regional operations and enforce global standards.
- BDelegate compliance responsibilities entirely to local subsidiaries, providing them with general guidelines.
- CEstablish a governance framework that integrates legal and regulatory requirements into the enterprise risk management (ERM) process.
- DConduct annual legal audits of all new regional operations to identify non-compliance issues post-implementation.
Show answer & explanationAnswer & explanation
Correct answer: C. Establish a governance framework that integrates legal and regulatory requirements into the enterprise risk management (ERM) process.
Integrating legal and regulatory requirements directly into the ERM process ensures that compliance is a continuous, proactive consideration across all operations, aligning with the board's concern for both compliance and efficiency. This approach allows for identification and mitigation of risks before they materialize.
Why the other options are wrong
- A. A centralized department might struggle with the nuances of diverse local regulations and could hinder operational efficiency due to potential bottlenecks.
- B. Delegating entirely to local subsidiaries without a unifying framework risks inconsistency, lack of oversight, and potential non-compliance across the corporation.
- D. Annual audits are reactive and identify non-compliance after it has occurred, which is less effective than a proactive, integrated approach for managing continuous compliance.
Integrated Compliance
The practice of embedding legal and regulatory requirements directly into an organization's enterprise risk management (ERM) framework and operational processes.
- Ensures proactive identification and mitigation of compliance risks.
- Aligns compliance efforts with strategic business objectives.
- Reduces the likelihood of legal penalties and reputational damage.
Memory trick: Link Laws to Risks, Live Legit.