Risk Compartmentalization Occurs When

question 36

Multiple Choice

Risk compartmentalization occurs when

• A)companies place their most problematic employees into separate profit centers so that they cannot influence one another to act unethically.
• B)all profit centers within a corporation are aware of the code of ethics.
• C)all profit centers within an organization become aware of the consequences of competitors' actions.
• D)various profit centers within an organization become unaware of the consequences of their actions on the firm as a whole.
• E)ethics and compliance programs reduce the risk of misconduct.

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Definitions:

Free-Rider Problem

A situation in which individuals receive benefits from a public good without contributing to its cost, leading to underprovision of those goods.

Selective Benefits

Selective benefits are advantages or perks provided exclusively to members of a group, organization, or society, rather than to the general public.

Collective Goods

Benefits or goods that are shared and cannot be denied to anyone within a community or society, such as clean air or public safety.

Membership Association

An organization founded and funded by members who share a common interest or goal, offering various benefits to members such as resources, networking opportunities, and advocacy.