Establishing an effective compliance program, or improving an existing program, is no easy feat. So, when you are confident you have identified your firm’s risks and implemented policies and procedures designed to prevent, detect, and correct rule violations, you can sit back and relax. Right?
Wrong. The reality is that your compliance program needs to continually evolve to keep pace with regulatory changes, as well as with the firm’s growth and expansion efforts.
If you recognize one or more of the following signs in your firm, it may be an indication that your compliance program could benefit from some updating:
1. You don’t regularly evaluate risks.
The risk landscape for financial services firms is in nearly constant flux. New and emerging risks stemming from the rapid pace of technological advancement and from regulatory rulemaking threaten firms and their clients.
If it has been more than a year since you reviewed and updated your firm’s risk matrix, you could have unidentified vulnerabilities in your compliance program.
2. The firm’s compliance training is a list of “dos” and “don’ts”.
Effective compliance training involves providing relevant, timely content, delivered in a way that gives employees the opportunity to engage in the process rather than training that simply tells learners what not to do. The start of a new year is a great opportunity to re-evaluate your compliance education, both for new employees and your ongoing training modules.
As you review your firm’s training materials, make sure the content reflects current rules and practices and that the delivery model is designed to foster learning.
3. You measure effectiveness by completion rates.
Ensuring employees complete required training, attestations, and other reports on-time is an important part of your compliance program’s success. However, if completion rates are the only metric by which you gauge program effectiveness, you may be missing opportunities to truly evaluate how well your program is working.
Proactive compliance officers understand the need to look at metrics related to violations, the impact of training on those metrics, the department’s ability to handle new or emerging issues, risk surveys, and more.
4. Compliance is viewed as a necessary evil.
If your firm’s compliance department is viewed as an unwelcome and burdensome responsibility rather than as a partner for the firm’s success, your program – and the firm – could benefit from taking a fresh look at the firm’s culture of compliance.
Effective compliance programs are those where the compliance function is seamlessly integrated in the firm, those where the CCO is a valued part of the firm’s senior leadership and the board and other firm leaders respect and support the department’s efforts.
5. Employees must be on-site to complete requirements.
In today’s ever-connected world, employees and supervisors alike expect to be able to log into firm systems and complete their work from anywhere, without feeling tethered to their desks. If your compliance system and processes are not mobile-friendly, system adoption and on-time completion rates are likely lower than they should be simply because employees find it onerous to meet requirements.
6. You are relying on outdated technologies or manual processes.
Finally, if your compliance program is built around spreadsheets and paper files, your firm could be at risk because of the inherent danger of human errors and the inability for human workers to manage the volume of data involved in managing compliance today.
In addition, firms with manual processes or technologies that don’t do what the firm needs them to do are missing out on significant cost- and process efficiencies. Effective regulatory technology tools are designed to help firm’s manage a changing risk landscape, while being scalable so the system can grow right along with the firm.
If your compliance program is outdated, implementing up-to-date technology can go a long way in helping you get back on top of your firm’s risks. When you introduce modern compliance technology, employees and supervisors will find it easier to get their work done (and they can do so from practically anywhere in the world).
Compliance staff will also have advanced tools at their disposal to help identify patterns and potential issues that otherwise may not have been identified.
Finally, compliance leaders will have real-time reporting capabilities so they can help everyone in the firm, from C-suite executives to entry-level workers, understand how their roles and compliance intersect to protect investors.
To learn more about ComplySci, request a demo today!