Which of the following represents a compliance risk?

Compliance risk refers to the potential for legal penalties, financial forfeiture, or material loss an organization could suffer as a result of failing to comply with laws, regulations, or internal policies. Neglecting tax obligations is a prime example of compliance risk because failing to meet tax requirements can result in significant penalties from tax authorities, which may include fines, interest on unpaid taxes, or even legal action.

In the context of compliance, it's essential for organizations to adhere to tax regulations as well as other statutory requirements. Failing to do so exposes them to various risks, such as reputational damage and financial repercussions, which underscores the importance of meticulous adherence to such obligations in the realm of compliance. This illustrates the potential adverse consequences of non-compliance in financial and operational terms.