What is Regulatory Risk?

Question

Accepted Answer

Regulatory Risk is the potential for a business, particularly in the financial sector, to incur losses, face legal penalties, or suffer reputational damage due to a failure to comply with laws, regulations, or internal policies, including those related to Anti-Money Laundering (AML), Know Your Customer (KYC), and international sanctions. This risk encompasses both the failure to adhere to existing rules and the negative impact resulting from new or changed legislation, which can fundamentally alter an organization's operating environment and profitability.

Regulatory Risk

What is Regulatory Risk?

What is the primary driver of Regulatory Risk and how does it manifest in the financial sector?

What are the most significant consequences of poor Regulatory Risk management for a financial institution?

How can organizations effectively mitigate Regulatory Risk, particularly in the context of AML and KYC requirements?

What is the key difference between Regulatory Risk and Compliance Risk?

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