Organizations need to maintain effective operating models to stay in compliance with regulations.
In today’s business environment, regulators and stakeholders expect effective implementation and risk management even in small and medium size companies. This is difficult in an environment where risks overlap and interact with each other, and where geopolitical developments have become essentially unpredictable.
Effective implementation of regulations in the financial sector requires rethinking complex policy frameworks, ensuring governance and ownership are well established in the three lines of defence, and establishing detailed risk-based monitoring and reporting mechanisms.
In the corporate sector, the challenges differ. Companies need to ensure that their policies and procedures are dynamic rather than static, and that their people on the ground understand the expectations and consequences of potential misconduct.
Both in the financial and corporate sectors, maintaining regulatory compliance becomes easier and more difficult at the same time once we factor in emerging technological trends, such as machine learning, big data, or robotic process automation. These technologies can identify risk trends invisible to the human eye and significantly increase efficiency, but on the other hand create risks and compliance requirements of their own, which need to be adequately handled.
Lastly, there is an increased focus from stakeholders on ethical behaviour, which goes further than strict compliance with regulations. Organizations need to consider their culture and values, and how this culture interacts with their different compliance risks.