Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

Which of the following risk types is primarily concerned with regulatory penalties?

1. Operational risk

2. Reputational risk

3. Compliance risk

4. Credit risk

The correct answer is: Compliance risk

The correct choice focuses on compliance risk, which is specifically related to the potential for regulatory penalties that may arise from failing to adhere to laws, regulations, standards, or guidelines relevant to an organization. Compliance risk encompasses the risk of legal or regulatory sanctions, financial forfeiture, and material losses an organization may suffer if it does not comply with applicable laws and regulations. This risk type is particularly important in the ever-evolving landscape of cryptocurrency and financial services, where regulatory frameworks are continuously changing. Organizations need to monitor their compliance diligently to avoid penalties that could arise from non-compliance. Operational risk deals more with internal processes, systems, and external events that affect an organization’s operational effectiveness. While it can have regulatory implications, it is not specifically centered on regulatory penalties. Reputational risk pertains to the potential loss of an organization's reputation due to various factors, including negative publicity, public opinion, or failures in service delivery. While compliance issues can certainly impact reputation, the core focus of reputational risk is broader than just regulatory penalties. Credit risk focuses on the potential that a borrower will fail to meet obligations in accordance with agreed terms, which is primarily concerned with the creditworthiness of the counterparty and does not directly address regulatory penalties. Thus, compliance