Reference no: EM133067699 , Length: word count:3500

Question

Read the following scenario carefully and make appropriate reference to its content in the answers you provide to each of the subsequent questions.

You are the head of regulatory compliance at Worldwide Organisation (WO), a firm regulated in a sector and jurisdiction of your choice, and have been with the firm for three years. Energised by the high level of interest in the products and services offered by the firm over the previous two years (both within the jurisdiction in which the firm is located and overseas), and keen to capitalise on this interest, the board and senior management of WO have been enthusiastic about recruitment during this period. The firm has employed large numbers of new sales staff throughout its numerous offices, many on short-term contracts. Unfortunately, this attitude to recruitment was not replicated in the assurance functions within the firm, many of which are now extremely short staffed and under increasing pressure.

Throughout the period of expansion, as numerous staff joined WO, alongside new products and services being introduced, your team regularly urged caution. In particular, you highlighted concerns about the inadequacy of customer suitability assessment for certain higher risk products and about potential inadequacies in the recruitment processes for new staff.

You also flagged concerns about the attitude towards risk management apparent among some of the business managers within the firm, particularly those who were new to this business sector. It is apparent from your compliance activities, your observations, and your discussions with members of other assurance functions within WO, that there are some managers who have demonstrated little understanding of the risks inherent within a regulated business offering products and services such as those supplied by WO.

Furthermore, there appear to be some who have little appreciation of how aggressive sales practices could be detrimental to the firm, and lack understanding of the potentially negative aspects of the products and services offered by the firm and the ways in which these might be targeted by criminals.

Although you have flagged the potential risk implications of these findings (both verbally at the board meetings you have attended and in the reports you have produced for the board and senior management), to date little appears to have been done to address them. Your focus on training and education to address some of these concerns has been curtailed to a significant degree, by both staffing limitations and other business needs. You have therefore attempted to alleviate these difficulties through a risk-based, focused compliance reporting and monitoring regime undertaken by members of your compliance team, allowing potential issues to be identified and flagged speedily to the board, senior management and business units.

In practice, this too has been hampered by a turnover of staff within the team during this period, resulting in the loss of a number of experienced individuals to other parts of the business. You have recognised the need to recruit a number of more experienced compliance staff but have yet to take any further steps to do this; you are also concerned that your request for additional resource may be denied so want to take time to consider how best to approach this.

Owing to the global pandemic, there has recently been a reduction in the level of interest in the products and services offered by WO and consequently a number of the newer posts across the firm have been eliminated. This has placed additional pressure on remaining staff, many of whom are beginning to complain about their increased workloads.

Having examined the output of the recent monitoring activities, which focused on the risk- management systems and controls within the firm, you note several aspects of this that still give you cause for concern, requiring immediate attention, together with a number of additional findings that raise further concerns. You schedule a meeting with your senior compliance team members to agree a plan of action to address these issues before presenting this directly to the board.

Writing with reference to the above scenario and drawing on your understanding of the topics covered in the Diploma in GRC, set out the issues to be addressed at the meeting, as follows.

a) Identify the risks to WO arising from the weaknesses apparent in the above scenario and explain why these should be of concern to the board of directors of a regulated firm.

b) Advise and explain why the attitude and approach of the various stakeholders referred to in the above scenario would cause you concern. Support your answer with examples and evidence drawn from the above scenario and elsewhere.

c) In preparation for the meeting referred to in the scenario, produce a high-level plan to act as the basis of discussions at that meeting. The plan should address the risks and weaknesses identified, creating a schedule of activity, allocating responsibilities and setting appropriate time frames accordingly, all supported by clear reasoning in support of the approach adopted.

Attachment:- Risk and Compliance.rar