Exposure under the proposal
- Maximum GBP 7,200,000 · After mitigation GBP 3,960,000 · Expected per year GBP 316,800 (now GBP 158,400).
Global Compliance · Expanded Global Compliance
Regulatory Scenario Analysis
Analyse what a business change would mean for compliance (entering a market, hiring, launching a product, changing the operating model) using verified applicability rule…
Demonstration: Rosewell Capital Management (fictional) · Asset management. Fictional data and a scripted answer.
The situation
- Organisation
- Rosewell Capital Management (fictional)
- Who is asking
- Chief risk officer
- Industry
- Asset management
- What happened
- A regulator is consulting on higher penalties and the board asks how the firm's exposure would change.
The question asked
How would our expected penalty exposure change under the proposed rule, for different assumptions about breach likelihood?
What it reads, and who can see the result
- Consultation paper (synthetic) documentProposed penalty rates.
- Breach history registerPast breaches and sanctions.
- Reads
- The proposed penalty parameters and the firm's breach history summary.
- Does not read
- Client data or regulator correspondence.
- Permission
- Risk function access.
- Who sees it
- The chief risk officer and the board risk committee.
Try it
Change the assumptions. Every result and the answer below are recomputed from them, and a warning appears when a result crosses a stated limit.
- Maximum penalty
- GBP 7,200,000Relevant revenue 180,000,000.
- Typical penalty after mitigation
- GBP 3,960,000
- Expected annual exposure
- GBP 316,800
- Expected annual exposure at today's 2% rate
- GBP 158,400
- Increase from the proposal
- GBP 158,400
The answer
Simulated answer. Written for this fictional case, not produced by a live model. Only the figures in it are computed, from what you decided above.
At 4% of revenue the expected annual exposure is GBP 316,800, GBP 158,400 more than today.
The maximum penalty is GBP 7,200,000; after the mitigation regulators typically allow, about GBP 3,960,000 would be imposed [S1][S2]. Weighted by a 8% chance of a breach in a year, the expectation is GBP 316,800.
An expectation hides the shape: a rare, large penalty looks small as an average. The board should see the maximum alongside it.
Relies on: S1 · Consultation paper, penalty proposalsS2 · Breach and sanction history, five years
No approval is needed for this result: it is read-only insight, and nothing consequential happens because of it.
What it produces
Limits of this example
- The breach chance is a judgement, not a measurement.
- Ignores reputational and remediation cost.
- This is a scripted demonstration on fictional data. No model was called and no real organisation, person or result is shown.
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