Scenario: Regulatory Change
A pharmaceutical company faces a new regulatory requirement that could significantly
increase compliance costs. The likelihood of the regulation being enforced is moderate, but
the impact on profitability is high. The company’s risk tolerance allows for only a 5%
reduction in annual profit.
What should the company do first?

Question

Scenario: Regulatory Change

A pharmaceutical company faces a new regulatory requirement that could significantly

increase compliance costs. The likelihood of the regulation being enforced is moderate, but

the impact on profitability is high. The company’s risk tolerance allows for only a 5%

reduction in annual profit.

What should the company do first?

Answer

B) Conduct a sensitivity analysis to assess financial impact

Answer

C) Immediately implement all possible compliance measures

Answer

A) Ignore the regulation until it is enforced

Answer

D) Transfer the risk by lobbying against the regulation

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