Question

Which of the following factors influence an examiner's assessment of the adequacy of fiduciary risk management processes? Select all that apply.

a. The board of directors and senior management are adequately overseeing an organization's risk management process.
b. A comprehensive system of internal controls has been adopted.
c. The bank has appointed a risk management compliance officer.
d. Risk management policies and procedures have been established and appropriate limits on risk to be incurred have been set.

Answer 1

An examiner's assessment of fiduciary risk management processes is influenced by the oversight of the board of directors and senior management, the adoption of a comprehensive internal controls system, the appointment of a risk management compliance officer, and the establishment of risk management policies with proper risk limits.

Step-by-step explanation:

Factors that influence an examiner's assessment of the adequacy of fiduciary risk management processes include:

• The board of directors and senior management are adequately overseeing an organization's risk management process.
• A comprehensive system of internal controls has been adopted.
• The bank has appointed a risk management compliance officer.
• Risk management policies and procedures have been established and appropriate limits on risk to be incurred have been set.

The board of directors is contingent on being the primary line of corporate governance and oversight for top executives. The auditing firm acts as a crucial check by reviewing financial records and certifying their accuracy, while large shareholders impose external governance.

However, executive influence over board appointments can sometimes undermine these governance mechanisms, as was evidenced in the case of Lehman Brothers' failure to provide accurate financial information.