Technology can help companies be more proactive in their compliance efforts. But many are not using it effectively to adapt to potential regulatory changes expected under the new administration.
The first step in preparing for regulatory change, according to Amy Matsuo, Principal and National Leader of KPMG LLP’s Regulatory Risk Practice, is establishing a centralized obligations inventory. From there, technology and data analytics can make a significant difference when it comes to compliance requirements and adapting to regulatory change.
However, a recent survey revealed six out of ten chief compliance officers are unsure whether their technology infrastructure can be adapted easily to align with regulatory change, and many are still relying on manual processes.
“There are a lot of technologies you can use to enhance an obligations inventory and keep it current. Today, taking that inventory and mapping it to your policies and procedures, your processes and controls, and your monitoring and testing is still a pretty manual process.”
To address this, Matsuo says it’s important to understand what you’re solving for and map out the technology to help get you there.
Another major issue facing financial executives is data quality. 51 percent of the CCOs surveyed identified the need to improve data quality for risk data aggregation and reporting as a top compliance challenge.
“Data quality has been a lingering issue, especially for big companies, according to Matsuo. “They’re in multiple jurisdictions, on multiple systems. The same principles that have been applied to financial data are starting to be applied in the non-financial space. We’re starting to see a similar rigor around data quality.”
The risks of not using data and analytics effectively are great, but the opportunities the technology presents are just as significant.
“If you think about data analytics for surveillance – employee or transactional – you have the ability to look at multiple points at the same time, in a way that our human mind can’t,” Matsuo says. “Being able to look at that for anomalies is tremendous and being able to look at operational metrics, correlate those out to potential compliance risks and being able to jump on things much sooner than we can today, is a great area for growth.”
Only 27 percent of CCOs strongly agree their compliance function has a change management process in place to identify and incorporate changes in laws and regulations into their policies and procedures. As regulatory requirements change, organizations must focus on investing wisely in areas of their compliance practices and programs that will help them comply and operate effectively.
Matsuo’s advice to financial executives is to look at the investments they’ve made in technology for their frontline, and apply them to the back office.
“For CFOs, it’s looking at the investments that you’ve made in technology and automation for your frontline – the customer experience – and using those technologies in the middle and back office to better automate your own processes. Imagine what kind of efficiencies and effectiveness we could get and sustainability of the processes. I think that’s where we’re at now.”•