Regulatory Compliance – The challenges and how to mitigate them

Regulatory Compliance – The challenges and how to mitigate them

There are countless challenges for businesses in assuring regulatory compliance. The rapidly growing data reliant systems and processes, coupled with integrated technology only prophesy a larger challenge to be conceived in the future. The secret thus lies in adopting advanced technology and automated solutions. To assess the effectiveness of a solution, we must start by listing the challenges that modern Organizations face.

Modern Challenges in Regulatory Compliance 

One of the biggest challenges in regulatory compliance functions is having a large number of regulations. For instance, some of the large financial institutions have more than 2100 pages worth of regulations that must be implemented and followed, and all of these are only from one regulator!

 

Having a large number of regulations means that it takes lots of time to initially understand and deliver the message to the first line of business who are required to comply with these regulations. 

 

Not only are the regulations large in terms of numbers, but there are continuous changes or revisions to regulations, and these changes could be on a daily basis. Regional as well as multi-national financial institutions need to keep track of the revisions and circulars of multiple regulatory bodies and must verify and inform Business Units in a timely manner. The process of verification must be quick and efficient to ensure timely distribution and execution of mitigation measures.

 

Analyzing the regulations diligently, and dividing them into their risks and control counterparts is essential for management to understand them and accurately assess risks’ impact and probability. As a result, they will be able to prioritize them and direct resources in one direction or the other. The result is a well-defined and efficient methodology that translates regulations into smaller and measurable compliance risks which can be delivered to Officers and Business Unit managers to control and manage effectively. 

 

Mitigating Risks efficiently 

Even after regulations are categorized into their respective counterparts, organizations are tasked with the mitigation of compliance risks and adherence to mandates. They must also monitor said tasks to provide compliance assurance, a challenge no lighter than the ones previously mentioned.

 

In fact, Monitoring compliance risks is extremely cumbersome and time-consuming. For instance, when analyzing the regulations for an insurance company, finding a large number of risks and issuing a control for each of them is a long and sophisticated process. This poses a question on how the compliance functions monitor various BU functions in BU in the organizations adhering to those mandated controls and properly managing compliance risks. 

 

Another part of the challenge is that unless you have the Business Unit implement those regulations, you will keep finding breaches going through the organization. In general, for the BU to monitor risks and mitigation controls, they need proper tools. And to be able to monitor these risks and test their controls, they need a methodology for that.

 

In short, developing and conducting compliance programs takes a long time.is time-consuming. Moreover, compliance functions must have a monitoring program to check independently if the BU is implementing the relevant policy and procedure of compliance.  

 

Solutions to raise the efficiency and effectiveness of compliance management? 

After introducing all the challenges of achieving effective Compliance, we can explore the traits of a successful and proactive automated solution that may help in overcoming these challenges  

 

For a large number of regulations, the system must have a complete and flexible library of regulations, not only for one regulator but for as many regulators as needed. The library allows the regulations to be uploaded and users can analyze the regulations and record the compliance risks and mandated controls, all within the system. The user should be able to filter and search through these regulations which will make it faster and easier to navigate.  

 

Once the Regulation is analyzed, and the recorded information verified by the Compliance Unit, the responsibilities may be allocated to Business Units, and risk management activities may commence with assessing the GAPs in the Control Environment.  

 

With the continuous changes and updates to the regulations, the compliance functions need to keep track of those revisions and articles in a time-based approach. The solution will do so by keeping track of implementation dates. This allows the user to keep track of the revisions, and regulations, and log the dates of the implementation. This way, the system automatically notifies the users that the old regulations are no longer valid after the date of implementation and in turn, reflects the new revisions onto the system.  

 

How to get your business to be more engaged in compliance 

Monitoring compliance is a time and effort-demanding process. The bulk of assuring Compliance must be undertaken within the daily operations of a Business Unit both individually, and within the aggregate of all business units within the organization.

 

A powerful Compliance Management system makes it possible to monitor compliance more efficiently because it measures the gaps in compliance. A breach can vary in impact and severity, and this must be considered when allocating control resources for mitigation.

 

Risk management units must be engaged with the Business unit managers in conducting the necessary workshops to assess the impacts and probability and the assets undergoing such. This will be recorded in a Central Database and the thresholds defined.

Learn more about CAREweb for Compliance and request your demo, here!

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