A new regulation introduces a potential risk that must be assessed to understand its impact on the enterprise’s operations and compliance obligations. The CGEIT Review Manual 8th Edition stresses that the first step in addressing new risks, such as regulations, is to conduct a risk assessment to evaluate their significance and implications.

Extract from CGEIT Review Manual 8th Edition (Domain 3: Risk Optimization):"When a new regulation is identified, the first step is to assess the associated risk, including its potential impact on operations, compliance requirements, and the likelihood of enforcement. This assessment informs subsequent actions, such as developing mitigation plans or updating governance frameworks." (Approximate reference: Domain 3, Section on Risk Assessment)

Assessing the risk associated with the new regulation (option D) provides the enterprise with a clear understanding of the regulation’s impact, enabling informed decisions about compliance, mitigation, or strategic adjustments.

Why not the other options?

A. Request an action plan from the risk team: An action plan is premature without first assessing the risk’s scope and impact.

B. Determine whether the board wants to comply with the regulation: The board’s decision on compliance should be informed by a risk assessment, not precede it.

C. Update the risk management framework: Updating the framework may be necessary later but is not the first step, as the specific risk must be understood first.