At ‘The future of the compliance function’- a webinar jointly run by business intelligence consultancy Thomson Reuters and Napier - compliance professionals agreed that the greatest challenge they face is keeping on top of the volume and speed of regulatory changes within the constraints of departmental budget and resources.
Subject experts Niall Coburn and Dr Janet Bastiman, Thomson Reuters' Regulatory Intelligence Expert for Asia Pacific and Napier’s Chief Data Scientist respectively, shared their insights with attendees in a discussion about the future of the compliance function.
Moderated by Thomson Reuters' Nathan Lynch, the session aimed to provide delegates with insights and advice to help them deal with increasing pressures within compliance.
Legacy solutions and hiring challenges are the top challenges facing compliance teams
Many commercial organisations are struggling with inefficiencies caused by legacy systems, and regulators are having the same issues, explained Niall, adding that ‘yesterday’s systems were not designed to meet the demands of today’s legislative environment’.
In addition, compliance staff are difficult to hire and expensive to train, with many organisations making costly recruitment mistakes as a result, said Janet.
Balancing increasing pressure to embrace fintech and regtech solutions with climate and ESG risk management means that compliance teams need to be involved in designing their own solutions whilst undergoing continuous upskilling to operate them.
The need to balance commercial and compliance priorities, meet regulatory demands, and effectively evidence culture and conduct are all set to increase over the coming months. To achieve all this, compliance teams will need to have a comprehensive understanding of risk and be willing to leverage expert help and advice.
‘Yesterday’s systems were not designed to meet the demands of today’s legislative environment.’ - Niall Coburn, Regulatory Intelligence Expert for Asia Pacific at Thomson Reuters
How to use AI and big data successfully for compliance
While AI and big data form the foundations of effective compliance operations, it’s also crucial that teams can access the information they need in a way that’s both quick and cost effective.
Introducing intuitive systems that are adaptable, easy to use and update is vital to managing legislative requirements across different regions as well as for saving time and cost in the short term and beyond.
Partnering with a technology vendor that offers more than just technical know-how is fundamental to implementing such systems. Organisations should seek vendors who are led by a thorough understanding of risk management.
Niall added that a well-scoped tech solution will also alleviate hiring challenges by enabling compliance teams to consider talent beyond those with deep tech skills to build teams with a broad risk management skill set. An enquiring mind and integrity are key to effective compliance.
A holistic approach to compliance is vital
Organisations must view compliance as a function that protects the organisation and ensures its survival, rather than a burden, according to the panel.
Ensuring the appropriate base data and technical systems is only part of the puzzle. The human element - in the form the team and its actions, expertise and training - is equally important.
Compliance teams need leaders that can influence the senior team and successfully explain risk and expected behaviours to the rest of the organisation.
How to maximise learning and development budgets
The difficulty in recruiting trained staff, paired with the time it takes to upskill existing personnel, has contributed to 30 per cent of firms outsourcing some or all of their compliance function.
But, as Janet pointed out, outsourcing means that you lose overall control of the outcomes, while retaining all of the risk. Equally, outsourcing compromises confidentiality, said Niall.
While smaller firms are still likely to outsource for some time to come, investing in tech stack updates could open up opportunities to bring the compliance function back in-house.. This, in turn, would facilitate better information flow and allows organisations to achieve greater efficiency and accuracy at less cost.
Teams should be grown from within, with a system for training, mentoring, and feedback embedded into an organisation’s culture, said Niall, adding that a shortage of appropriately trained staff is simply a failure to plan.
How technology can help compliance teams to help themselves
To meet the challenges they face, now and in the future, compliance functions need to examine whether their current tech solutions are fit for purpose and if their recruitment and training programmes are sufficiently broad and continuous.
Firms that address these gaps will be much less likely to fall foul of regulators. More so, they won’t be among the 30 per cent of organisations that currently turn away potentially profitable business as a result of poor risk management.
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Photo by Diego Carneiro on Unsplash