SIRA: Identifying and Managing Integrity Risks

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Questions and Answers

What is the primary objective of the Identify Risks component of the SIRA?

To assess the likelihood and impact of identified risks

To recognize all possible integrity risks that an organization may face (correct)

To develop policies and procedures to mitigate identified risks

To implement controls and procedures to manage identified risks

What is the purpose of assessing risks in the SIRA process?

To identify all possible integrity risks that an organization may face

To implement controls and procedures to manage identified risks

To develop policies and procedures to mitigate identified risks

To prioritize risks and determine where resources should be directed for mitigation (correct)

What triggers the need for reporting and addressing changes in the SIRA process?

Ineffectiveness of controls

Both A and B (correct)

Changes in the risk environment

Implementation of new policies and procedures

Why is conducting a SIRA or similar risk assessment a regulatory requirement for financial institutions in many jurisdictions?

To ensure compliance with changing laws and regulations Signup and view all the answers

What is the frequency of the SIRA process?

Ongoing process Signup and view all the answers

What is the ultimate goal of the SIRA process?

To stay abreast of new and emerging risks and stay in compliance with changing laws and regulations Signup and view all the answers

What is the primary purpose of understanding the business environment in risk management?

To lay the foundation for further analysis and mitigation Signup and view all the answers

What type of risks are related to non-compliance with laws, rules, and standards?

Compliance and regulatory risks Signup and view all the answers

What is the purpose of brainstorming sessions in risk management?

To gain a wide range of perspectives Signup and view all the answers

What is the purpose of a risk matrix in risk assessment?

To position risks according to their likelihood and impact Signup and view all the answers

What is the primary consideration when prioritizing risks in risk assessment?

Probability and impact of the risk Signup and view all the answers

What is the primary purpose of documenting and classifying risks?

To enable prioritization in later phases of risk management Signup and view all the answers

What is the primary benefit of using a dynamic risk assessment process?

It allows for regular reassessment and updating based on new information Signup and view all the answers

What is the primary purpose of feedback from employees, customers, and stakeholders in risk assessment?

To provide new perspectives and insights Signup and view all the answers

What is the primary reason for considering the specific context of the organization in risk assessment?

To ensure that what is considered high risk for one organization may be acceptable for another Signup and view all the answers

What is the primary purpose of documenting findings, decisions, and actions in risk assessment?

To ensure transparency and support decision-making Signup and view all the answers

Study Notes

SIRA Overview

SIRA consists of four parts: Identify Risks, Assess Risks, Implement Controls and Procedures, and Monitoring and Reporting
SIRA is an ongoing process to ensure an organization stays abreast of new and emerging risks and complies with changing laws and regulations

Identify Risks

Recognize all possible integrity risks an organization may face, including money laundering, terrorist financing, corruption, fraud, and market abuse
Understand the business environment internally (processes, products, services, systems, employees, customers, and partners) and externally (market, competition, regulatory environment, and potential threats)
Map risk areas, including financial risks (credit risk, market risk, liquidity risk), operational risks (system failures, process failures, human error, fraud), compliance and regulatory risks, reputational risks, and strategic risks
Use various tools and techniques, such as brainstorming sessions, interviews, surveys, data analysis, and developing risk indicators

Risk Assessment

Assess risks to understand how identified risks may affect the organization and determine which risks to prioritize in the mitigation process
Quantify each risk by determining its probability of occurrence and potential impact (financial, reputational, operational efficiency, etc.)
Use tools like risk matrices to position risks according to likelihood and impact, revealing high-priority risks
Prioritize risks based on probability, impact, cost, and effort to manage the risk, considering the organization's context, goals, capabilities, resources, and risk tolerance

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Description

Learn about the different stages of the SIRA process, including identifying and assessing risks, implementing controls, and monitoring and reporting. Understand how to prioritize risks and determine their likelihood and impact.