Risk management technology can aid in streamlining this process by giving a real-time view of compliance risk and all other hazards that financial institutions face.
FREMONT, CA: Without a doubt, compliance and risk management are intricately linked, with both playing a critical role in preventing threats to corporate stability and brand reputation. However, as global regulations and stakeholder pressures grow, it is more important than ever for financial institutions to recognize the main differences–and parallels–between the two disciplines, as well as where their activities intersect.
Firms must now conform to various legal standards to guarantee that they conduct fairly and ethically when previously they only had to adhere to good business practices. The distinctions between risk and compliance have blurred in recent years as a result of increased regulatory pressures.
Risk and compliance operations are frequently handled by two independent divisions in many financial businesses. However, this has the drawback of separating compliance risk from other corporate risks, resulting in a disconnected strategy.
Most senior executives will agree that a clear overview of compliance requirements is critical to a company's risk mitigation. To help strengthen the ERM (Enterprise Resource Management) approach, risk professionals must understand the risk of non-compliance in the same depth as any other business risk. Therefore, Compliance personnel should be informed about the company's risk appetite to make better decisions.
Managers should look to develop reporting lines that incorporate compliance into risk management planning and execution where risk and compliance are separated within the organization's structure to bring the two areas together. Risk management technology can aid in streamlining this process by giving a real-time view of compliance risk and all other hazards that financial institutions face.
Another significant advantage of automating risk management operation is the ability to disseminate critical regulations from a central document repository, which helps to foster a culture of compliance among employees and lowers the danger of a data breach. In a world where the two disciplines are constantly evolving, risk management systems may make light work of otherwise onerous administrative activities while simultaneously serving as a critical analytical tool to help organizations focus their attention where it is most required.
