Risk Management Strategies and Compliance Mechanisms in Blockchain BBLC Practice Questions (Page 1)

Questions 1–5

1. 1foundation · easy

   What is the primary role of a governance structure in a blockchain initiative?

   • ATo eliminate the need for regulatory oversight
   • BTo ensure that all transactions are public
   • CTo define decision-making processes, roles, and responsibilities for managing the blockchain
   • DTo maximize the mining rewards for participants
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2. 2foundation · easy

   A company decides to use multiple blockchain platforms for different use cases to avoid over-reliance on a single vendor. This is an example of which risk mitigation strategy?

   • ARisk avoidance
   • BRisk transfer
   • CRisk diversification
   • DRisk reduction
   Reveal Solution Discussion Select an answer first
4. 3expert · hard

   A cross-border payment consortium is evaluating a blockchain solution. The risk team has identified two critical risks: (1) a regulatory change in one country could require freezing certain transactions, and (2) a smart contract vulnerability could allow unauthorized fund transfers. The consortium has limited resources and must prioritize. Using a likelihood-impact matrix, which risk should be prioritized and what is the most appropriate mitigation?

   • APrioritize the regulatory change because it has high impact; implement a governance mechanism to freeze transactions.
   • BPrioritize the regulatory change because it is easier to mitigate with a simple policy change.
   • CPrioritize the smart contract vulnerability because it has high likelihood and high impact; implement formal verification and a bug bounty program.
   • DPrioritize both equally and allocate resources evenly.
   Reveal Solution Discussion Select an answer first
5. 4application · medium

   A consortium of banks is evaluating a blockchain-based interbank reconciliation system. The risk team has identified two key risks: (1) a smart contract bug that could cause incorrect settlement, and (2) a regulatory change that could require altering transaction data. Using a likelihood-impact matrix, which combination should be prioritized for immediate mitigation?

   • AHigh likelihood, high impact: smart contract bug; implement formal verification and bug bounty programs.
   • BLow likelihood, low impact: regulatory change; accept the risk and monitor.
   • CLow likelihood, high impact: smart contract bug; purchase insurance to cover potential losses.
   • DHigh likelihood, low impact: regulatory change; implement an on-chain governance mechanism for protocol upgrades.
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6. 5application · medium

   A real estate platform is using smart contracts for property rentals. They must comply with local tenancy laws that require a 30-day notice before eviction. How can the smart contract be designed to enforce this requirement?

   • AProgram the contract to accept an eviction request but only execute it after a 30-day delay
   • BAllow the landlord to terminate the contract instantly if the tenant misses a payment
   • CStore the eviction notice on-chain but rely on the landlord to wait 30 days before executing
   • DUse an oracle to verify the tenant's payment history before allowing eviction
   Reveal Solution Discussion Select an answer first