When operating in a highly regulated market, compliance requirements become paramount, as failure to comply can lead to severe legal penalties, financial losses, and reputational harm. According to the CISM Review Manual, 16th Edition, Domain 2: Information Risk Management, Task 2, understanding and addressing legal, regulatory, and contractual requirements is critical in risk management, especially in regulated environments. This ensures that the risk management strategy is aligned with mandatory regulations and industry standards. Other factors (such as outsourcing and business culture) are important, but compliance is the primary driver in highly regulated markets.