What Are The Top Compliance Risks For 2020?

With the evolving governance, risk management, and compliance (GRC) landscape, compliance officers need to keep pace. They need to get their staff up to speed on new rules and re-educate them about the changes to the existing one. Here is a list of risks that they may face in 2020.

FREMONT, CA: In the present market, organizations are facing greater scrutiny than ever. And this year, the focus on compliance is expected to continue to escalate. Thomson Reuters Cost of Compliance Report 2019 says that most of the firms expect the amount of regulatory information published by regulators and exchanges will increase over the next 12 months.

With the evolving governance, risk management, and compliance (GRC) landscape, compliance officers need to keep pace. All the companies should be ready with appropriate training programs to deal with new regulations. These programs will help their staff to learn more about new rules and re-educate them about the changes.

Here are some of the issues which may arise in the sector in 2020:

1. Increasing regulatory, trade and recession uncertainties complicate risk analysis:

Nowadays, organizations operate in an environment of unprecedented change. The geopolitical volatility, regulations, and macroeconomic conditions make it difficult for leaders to evaluate and handle organizational risks in a situation where fast, proactive responses to emerging risks are becoming more crucial to success.

2. Transaction monitoring

Not necessarily a new concept by any means, but one where there is greater interest, or at least a greater interest in getting it right. No doubt, effective transaction monitoring has widespread advantages ranging from fraud prevention to identify sales patterns and activity, thus informing the marketing and product design. But just like the sanctions screening rules and parameters, they also need to understand the rules behind the transaction monitoring and what drives the production of the daily/weekly/monthly reports. Despite its advantages, supporting the manual internal suspicious activity reporting mechanism, for instance, or identifying out of character customer transactions in straight-through processing, transaction monitoring can be left to its own devices, running unchallenged for most of the time. Transaction monitoring is an essential contributor to a firm’s suite of systems and controls, and to retain credibility, and it needs to be kept up-to-date.

3. High social consciousness leads to challenging stakeholder demands

Earlier stakeholder demands focused primarily on increasing shareholder value, but now organizations are being pushed to do more as stakeholders, from employees to investors, to feel more strengthen to request a change. Although the results of getting it wrong are expensive, some opportunities exist for companies that can successfully find the way for these new demands.

4. Improvements in data processing increase risk to businesses and consumers

To improve risk management, maintain competitive advantage, and increase the efficiency of an organization, data is a key differentiator. Despite concerns around how companies combine, analyze, and use information, data processing is now on pace to surpass data collection as the primary source of privacy risk for organizations. Data collection can help to manage risk and protect customer information, so public scrutiny and heightened regulatory attention is driving organizations to focus mainly on it.

5. Outer change accelerates the complexity of compliance

The ecosystem of business is complicated because so many organizations collaborate with third-party providers and hire contingent workers. These relationships have opened firms up to additional risk due to recent regulatory developments. The third parties work within critical organization functions, systems, and data, which create new compliance challenges and uncertainty of financial and reputational damage.

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