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The Relationship of Technology and Compliance: RegTech

October 27, 2016 by
Filed under: Compliance Management

The topic of compliance doesn’t seem to be going away anytime soon. Regulators, over the ongoing concerns of attorneys general, advocacy groups, and consumers continue to raise the levels of regulation and their expectations of sound organizational business practices. The associated costs of compliance – people, capital, time, reengineered processes, systems, etc. – continue to mount. Technology is a key foundational piece to the understanding, implementation, embedment, and sustainment of an approach to manage the risks and controls of regulatory compliance.

RegTech is Part of Integrated Risk Management

The relationship of technology and compliance has officially culminated in marriage and a surname of RegTech (the coalescing of the words “regulatory” and “technology”). This burgeoning topic is an important aspect of integrated risk management and how risk management software is shaping functions across industries. Risk management software continues to be adopted, albeit in functional silos, in organizations with higher regulatory scrutiny. Point solutions, such as specific compliance software, serve an important purpose in codifying the framework and facilitating risk management processes such as risk and control assessments, metric creation and monitoring, action plan execution, and reporting. Risk data, whether structured or unstructured, is created and used by these solutions to create a risk profile and the supporting detail is a basis for conclusions.

Organizations are realizing that being in compliance isn’t purely a compliance or legal function matter. Meeting compliance and reporting obligations extends to other second line functions and the business as well. For example, everyday operational processing risks may benefit from continuous control testing and monitoring. Analytics may identify underlying causal relationships. Risk topics that are managed by other areas, such as cyber and information security, may be excluded from reporting, left for executives and the board to determine its compliance affects, or translated incorrectly given risk taxonomy variances. As a result, the rationalization on the efficacy of integrating these disparate tools is starting to occur (in support of integrated risk management practices).

Operationalize Risk Management Practices

Operationalizing risk management requires executing activities while maintaining and utilizing its output. Risk management software enables the latter. Staying abreast, interpreting, and implementing regulations requires diligence. The ability to assure and opine on compliance necessitates executing risk management activities efficiently and holistically throughout the business. The software should meet all of the compliance activities described above (e.g., self-assessment processes, action plan execution, metric/risk/control monitoring, and reporting) as well as the ability to bring in external vendor data (i.e., on new and changing regulations). Compliance requires every employee to take ownership. Education and communication are tantamount to its success.

The financial services industry, although not the only industry that RegTech has value for, is making the greatest investments in this area. For example, BWise is working with some of the world’s largest and sophisticated banks in their regulatory compliance efforts.

Benefits of using BWise software in the regulatory compliance space include:

  • Configurable: customers can create/edit/add/delete fields suited to their specific compliance needs, reporting requirements, and process flows without the need for BWise involvement
  • Speed: short timelines to get the solution up and operating
  • Organized and Scalable: central storage, organization, and mining for the ability to use the same risk and control data for multiple purposes
  • Timely: risk and control data and summaries can be seen in near real-time through portlets and dashboards; reports can be produced configured and produced quickly

For more information on BWise and its software solutions please, request the recorded webcast about compliance.

Tags: Compliance

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