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.

Question

Quizplus · Accepted Answer

Risk compartmentalization occurs when various profit centers within an organization become unaware of the consequences of their actions on the firm as a whole. This happens when each profit center only focuses on their own performance without considering the impact on the entire organization. This can lead to unethical behavior and increased risk. Companies should strive to create a culture of ethical behavior that permeates all levels and departments within an organization, rather than allowing risk compartmentalization to occur.

Risk Compartmentalization Occurs When