This present paper is facing the importance of compliance in banking and explains how banks can prevent their firms from risk. The term paper is divided into two main parts. The first part includes a theoretical discussion of the term compliance and provides an introduction to the tasks of compliance management. It represents an explanation of the classification, the goals and the necessity of compliance. The second part reflects the compliance risk, and the question of how it can be prevented will be answered. In the end, there will be a summary with a conclusion of this term paper.
A regulation ensures that an organization is following the standards and the rules set for the industry. These rules are set by the government, corporations and the law. These regulations contribute to maintain confidence in every sector and help to protect a financial dilemma. Corporations like banks or financial institutions have to provide a compliance regulation. Nevertheless, are they even necessary, and can they prevent certain, and uncertain risks?
Table of Contents
- 1 Introduction
- 2 Compliance
- 2.1 Conception of compliance
- 2.2 Corporate Governance
- 2.3 Compliance management
- 3 Compliance risk
- 3.1 Characteristics of compliance risk
- 3.2 Governance of risk
- 3.3 Factors of non-compliance in banking
- 3.4 Preventing compliance risk
- 4 Conclusion
Objectives and Key Themes
This paper examines the importance of compliance in the banking sector, exploring how banks can mitigate risk. It achieves this by first establishing a theoretical understanding of compliance and its management, followed by an analysis of compliance risks and their prevention. The paper does not delve into the conclusion or final chapter to avoid spoilers.
- The definition and scope of compliance in banking
- The role of corporate governance in compliance
- The nature and characteristics of compliance risks
- Strategies for preventing compliance risks
- The relationship between compliance and corporate social responsibility
Chapter Summaries
1 Introduction: This introductory chapter sets the stage for the paper by defining compliance as adherence to regulations, laws, and codes of conduct, highlighting its importance in maintaining public trust and preventing financial crises within the banking industry. The chapter outlines the paper's structure, focusing on both the theoretical underpinnings of compliance and the practical application of risk prevention strategies. It poses the central question of the necessity and effectiveness of compliance regulations in preventing both certain and uncertain risks within the banking sector, framing the investigation for the subsequent chapters.
2 Compliance: This chapter delves into the concept of compliance, beginning with its definition and the resulting management responsibilities. It emphasizes the lack of a universally established definition and explores the varying perspectives on compliance's scope and application within organizations. The discussion expands to incorporate the ethical and cultural context of internal compliance regulations, drawing a contrast between the purely profit-driven view (as articulated by Milton Friedman) and the broader concept of corporate social responsibility, where compliance extends beyond legal requirements to encompass moral considerations and stakeholder interests. The chapter further integrates the discussion of corporate governance, examining the German Corporate Governance Code and its implications for compliance, highlighting the interconnectedness of these concepts within responsible corporate management.
3 Compliance risk: This chapter addresses the crucial aspect of compliance risk within banking. It begins by characterizing compliance risk and then explores its governance, highlighting the importance of effective risk management strategies. Subsequently, the chapter investigates the factors that contribute to non-compliance in banking, providing a critical analysis of potential weaknesses within banking institutions and regulatory frameworks. Finally, it proposes and elaborates on mechanisms and strategies designed to effectively mitigate and prevent compliance risk, providing practical solutions and recommendations for minimizing the likelihood of non-compliance occurrences within the sector.
Keywords
Compliance, banking, risk management, corporate governance, corporate social responsibility, regulations, ethics, prevention, stakeholder interests, German Corporate Governance Code.
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What is the main topic of this paper?
This paper examines the importance of compliance in the banking sector and explores how banks can mitigate compliance risks. It covers the theoretical understanding of compliance and its management, as well as the analysis of compliance risks and their prevention.
What are the key themes explored in the paper?
The key themes include the definition and scope of compliance in banking; the role of corporate governance in compliance; the nature and characteristics of compliance risks; strategies for preventing compliance risks; and the relationship between compliance and corporate social responsibility.
What does the paper cover in its Introduction chapter?
The introduction defines compliance, highlights its importance in maintaining public trust and preventing financial crises, and outlines the paper's structure. It poses the central question of the necessity and effectiveness of compliance regulations in preventing risks within the banking sector.
What is discussed in the Compliance chapter?
This chapter delves into the concept of compliance, its definition, and management responsibilities. It explores varying perspectives on compliance's scope, incorporates ethical and cultural contexts, and contrasts profit-driven views with corporate social responsibility. It also integrates the discussion of corporate governance, examining the German Corporate Governance Code and its implications for compliance.
What are the main points covered in the Compliance Risk chapter?
This chapter addresses compliance risk in banking, characterizing it and exploring its governance. It investigates factors contributing to non-compliance, analyzing potential weaknesses in banking institutions and regulatory frameworks. Finally, it proposes strategies to mitigate and prevent compliance risk.
What keywords are associated with this paper?
The keywords are: Compliance, banking, risk management, corporate governance, corporate social responsibility, regulations, ethics, prevention, stakeholder interests, German Corporate Governance Code.
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Based on the content, the intended audience likely includes academics, researchers, and professionals in the banking and finance industry interested in compliance and risk management.
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- Quote paper
- Anonym (Author), 2020, The importance of compliance in banking, Munich, GRIN Verlag, https://www.grin.com/document/1026118
