This research study is significant as it provides comprehensive information regarding the concept of compliance risk management. Besides this, readers get information regarding its importance and actions taken by the banks for mitigating the risks. It facilitates future researchers to get background information related to their research topic to carry out their research work in an effective and efficient manner. Changes have been occurred in the business environment in a frequent manner which results in the occurrence of different risks. This study facilitates in providing information related to different risks that can be occurred in the organization along with the measures that can be taken to avoid and prevent the risk before its occurrence (Steinberg, 2011).
It is essential for the banks to abide by the rules and regulations established by different regulatory authorities associated with banks. The main reason behind it is that it facilitates in upholding the soundness and integrity of the financial system. It is important for the banks to comply with rules and regulations established by regulatory authorities as its failure results in occurrence of heavy financial penalties to the organizations. Occurrence of rapid changes in the business environment results in the occurrence of different risks due to which, it is essential for the companies to establish effective risk management framework for managing and controlling the risks. Along with this, occurrence of different corporate scandals results in the compliance of increased national and international regulations (Kondabagil, 2007).
Effective compliance program improves the overall quality of the operations undertaken by the businesses. It is essential for the businesses to establish and implement compliance risk management framework as it results in improving the overall efficiency of the company. This results in building trust and loyalty among the customers for the brand. This framework facilitates in managing different risks in an effective manner. There is an occurrence of more number of corporate scandals in banks along with the changes in the banking regulations due to which, nowadays, banks focus on adopting different strategies to manage the present risks in an effective manner (Guizot, 2006).