ARisk Appetite Statement (RAS)helps financial institutions defineacceptable risk levelsand align them

withregulatory compliance and business strategy.

Option A (Correct):Incorporating risk appetite adherence into internal reporting ensures consistent

enforcementandaccountabilityacross business functions.

Option D (Correct):Embedding risk appetite into daily processes ensures that compliance is built into

the organization’s culture and operations.

Option E (Correct):Training employees on risk appetite awareness helps them understand

compliance limits and risk management principles.

Why Other Options Are Incorrect:

Option B (Incorrect):Whiletraining managers on "good" risk-takingis valuable,it does not directly

enhance risk appetite awareness for compliance.

Option C (Incorrect):Describing risk controls is useful but insufficientfor embedding risk appetite into

an organization’s structure.

Best Practices for Implementing Risk Appetite Awareness:

Ensure risk appetite is a key part of regulatory and operational reporting.

Train employees at all levels on risk tolerance boundaries.

Integrate risk appetite considerations into product development and customer onboarding

processes.

Reference:

Basel Committee’s Principles for Risk Management

FATF Recommendation 1 (Risk-Based Approach to AML)

Wolfsberg Group Guidance on Risk Appetite in Compliance