Risk and compliance functions often work together; which of the following best desribes the issue...

Understanding Zero Risk Appetite in Compliance

Azero risk appetitemeans the organizationdoes not tolerate any compliance breaches.

However, inreal-world risk management, it isoften impracticalto havezerorisk exposure.

Some compliance violationsmay occur despite strong controls, making a strict zero-risk stanceunrealistic.

Why Answer C is Correct

If an organization adopts azero risk appetite for compliance,any compliance issue, even minor ones, would breach this policy.

Thiscontradicts practical risk management, which allows forsome residual risk while maintaining controls.

Why Other Answers Are Incorrect

Option

Explanation

A. A zero risk appetite is illegal under all known regulations.

Incorrect– It is notillegal, but it isimpracticalin many industries.

B. It means that there can be a risk self-assessment workshop for the compliance department.

Incorrect– Self-assessments are part of compliance butdo not define zero risk appetite issues.

D. It will result in a compliance investigation conducted by the first line.

Incorrect– Investigations are typically conducted by thesecond or third line of defense (compliance or audit), not the first line.

PRMIA Risk Appetite Guidelines

Basel & ISO 31000 Risk Management Frameworks

PRMIA References for Verification