Many businesses and government entities are struggling to manage compliance requirements.
For many, the whole experience has evolved like the proverbial frog in a pan of increasingly hot water. They have put up with things for so long, often with limited resources, that they have not fully appreciated how problematic the situation has become. But as we all know, what you don’t know can hurt you and the more you know, the better prepared you will be to avoid compliance mishaps.
Here are five compliance challenges we see all the time:
1. Compliance silos, which grow like weeds
A very common problem is that separate activities, roles and teams have developed over time to address differing sets of compliance requirements. There is often a lack of integration and communication among what are effectively separate compliance silos. The result can be unnecessary duplication of effort—and the evolution of multiple different systems that are clumsy and inefficient to maintain.
The cause? Many compliance processes tend to change over time in response to the latest regulations, or perhaps due to mergers and acquisitions or other business re-organizations. It is not surprising when, over time, the situation into something downright ugly—or at least far from optimal and certainly wasteful of resources.
2. No single view of compliance assurance
The lack of compatibility between different siloed compliance systems also often means that it is very difficult for senior management to obtain an insightful overview of the full current state of compliance activities and perform a timely assessment of relative compliance risks. This, in itself, can be the biggest issue and cause of greatest concern. If it has become difficult to get a clear view of compliance risks, then the chances that a damaging risk slips under the radar, goes unaddressed or is simply ignored, are greatly increased.
3. Cobbled together, home-grown systems
Another area of weakness and concern is the challenge of dealing with a home-grown system…or systems. Using generalized software, such as MS Excel spreadsheets and Word documents, together with a mix of tools, such as shared folders and file systems, may have made sense at one point. However, as requirements become more complex, such systems become increasingly painful, inefficient and risky to use.
Spreadsheets, in particular, are prone to risks and lack of reliability because of the ease of making errors and accidental changes. Compiling hundreds or thousands of spreadsheets to support compliance management and regulatory reporting is often a logistical nightmare, highly time-consuming and easily prone to error. Lack of an audit trail or activity log in spreadsheets is another significant concern that has been highlighted in many regulator reviews and examinations.
4. Old software that wasn’t designed to keep up with frequent changes
Challenges also arise with using older compliance software products that are just not designed to deal with constant change. So, they become increasingly expensive to upgrade, unfriendly to use and difficult to maintain.
5. Missing the benefits of automated monitoring
One other thing that many compliance teams are not doing well is harnessing the power of analytic technologies. Data analytics are now well established as a very effective way to monitor and test many forms of transactions and other activities that are impossible to examine manually. Yet many compliance teams have not taken advantage of this approach. They usually rely heavily on sample tests of procedures to determine if controls and processes for compliance appear to be working as intended. However, not only does this mean that enormous volumes of activities are never actually checked for compliance (because reliance is placed on the systems and processes), but that there is no way to produce indicators of compliance risks for which no controls were implemented. What you don’t know can hurt you.
Top 8 better practices in compliance management
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