Explanation:
It's a proactive approach that involves analyzing potential compliance risks, setting up preventive measures, and developing contingency plans to handle possible violations. It is vital for preserving a company's reputation and avoiding legal or financial penalties.
Practical Example of Compliance Risk Management:
A financial services firm conducts regular audits and risk assessments to identify areas where it might be at risk of non-compliance with financial regulations, and implements necessary controls to mitigate these risks.
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