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A company did not correct the root issue even after a regulatory penalty. What is the most correct analysis?

Answer and explanation

Correct answer: Legal risk will continue without root-cause correction

The governing concept is continuing legal compliance and corrective action in the legal environment. A regulatory penalty is generally a consequence of non-compliance; paying it does not automatically remove the underlying breach. If the company does not identify and correct the root cause, the same violation may recur, leading to additional penalties, notices, licence restrictions, litigation, or reputational damage. Therefore option B is the most correct analysis. Option A wrongly treats punishment as a remedy, while options C and D have no necessary connection with regulatory correction. Effective compliance requires root-cause analysis, a corrective plan, assigned responsibility, evidence of implementation, and follow-up monitoring.

Related tags

Business-EnvironmentLegal-EnvironmentCorrective-ActionCompliance-RiskLegal EnvironmentBusiness EnvironmentBusiness StudiesClass 12 Mcq

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