Real-time data dashboarding empowers effective Compliance Risk Management


Real-time data dashboarding empowers effective Compliance Risk Management

Realize the true potential and benefits of data

Data driven insights should be a central component for an effective and systematic Compliance risk management. This can be achieved through an integration of compliance risk assessments such as the SIRA, (real-time) data gathering and risk-based monitoring and testing of Compliance controls.

In our blog series on the Systematic Integrity Risk Assessment (SIRA) we explained the importance of a data-driven approach to improve the maturity of SIRA. We discussed that permanently tracking relevant Compliance data ensures a strategic approach for mitigating integrity risks while staying efficient and secure. However, further efforts and alignment is required for organizations to realize the true potential and benefits of data within Compliance risk management (CRM).

A holistic view on Compliance risks and mitigation

To fully achieve an effective and data-driven assessment of Compliance risk, a combination is required of not only a risk assessment that is built on qualitative input, but also a quantitative perspective through real-time dashboarding and effective control monitoring & testing.

These components are strongly interconnected. Real-time insight into your data contributes to identifying anomalies regarding the effectiveness of controls. It may even allow you to prioritize control monitoring and testing based on certain key risk indicators, significant changes or other trends in your data. As a result, costs and efforts can potentially be reduced by further refinement of controls. On the other hand, real-time insights into data also helps to anticipate the likelihood of Compliance risks as soon as trends or hidden risks are revealed. These risks may require immediate actions and further strengthening of controls.

Next to the input from the data angle, insight into the functioning of controls also plays an important role in the assessment of actual Compliance risks. A proper understanding of the effectiveness of controls is therefore crucial. More data-driven control monitoring and testing leads to a better understanding of control effectiveness, better informed risk assessments and enables you to act directly when certain risk are outside of appetite.

Challenges on achieving a holistic view on Compliance Risk Management

Achieving insight driven Compliance risk management begins with establishing a firm foundation through a strong control environment, yet this can already be challenging. Control frameworks are getting more complex and often there are even multiple frameworks simultaneously in place, causing overlap and a lack of standardization. It is common that control environments are outdated because of lack of (timely) revisions, or lack of clarity in the governance and control ownership. Meanwhile, controls are often being outsourced without necessarily organizing proper oversight and reporting. Control testing is not always structurally performed, or test results are open to various interpretations. European and national regulators therefore increasingly stress the importance of a robust and adequate internal control framework as they experience that the fundamentals are not yet up to standard everywhere. 

Unlocking the data with a standardized data extraction approach

For an effective integration of the three abovementioned components it is essential to have relevant and high quality data available in a timely manner. Our proven approach is based on four steps;

  • First, define the Compliance business goals or the burning questions that are currently unanswered by the business users. Based on these goals, identify the relevant compliance data to help answer these questions.
  • Second, identify the source systems and the data points from these systems. It’s also key to ensure that the data is easily and timely accessible and can be extracted from these source systems.
  • Next, determine a common data definition which allows both the business users and the data experts to speak a common language. At this stage, it’s also important to identify key risk indicators and thresholds so that live dashboard can automatically identify exceptions that are above or below the thresholds. 
  • And lastly, create an automated data extraction model including live dashboards, apply data governance principles and quality check procedures.

To achieve a truly effective and insight driven Compliance Risk Management it remains important to highlight that these steps should be done in an iterative manner and it should be a continuous cycle to adapt and enhance the data extraction process over time.

When taking the next leap in Compliance Risk Management a comprehensive maximization of the data utility is no longer optional. 

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