July 17, 2019 | Written by: John Kelly
Categorized: Banking | FinTech | IBM RegTech Innovations
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Today, risk-awareness and risk averse behavior is the responsibility of everyone in the firm, so staff need to be able to engage in the common goal of regulatory compliance. In the current complex regulatory environment (see Figure 1), and with growing costs associated with reporting, Know Your Customer (KYC), sanctions and the like, it is important to have effective and user-friendly governance, risk and compliance (GRC) tools that staff will readily adopt and use.
Continued change can create lag in the organization between existing compliance capabilities and latest regulatory demands. Those who are closest to operational risk – the first line of defense, or “1LoD” – may be working with outdated and inadequate tools. Or, they may work with various effective tools, but in a labor-intensive and fragmented process.
Either way, gaps persist in the ability of staff to use tools effectively, make risk-aware decisions and meet emerging requirements with up-to-date capabilities. In an April 2019 survey conducted by Risk.net, IBM examined how financial firms are looking at adoption of next-generation governance, risk and compliance solutions to bridge these issues. The survey polled 106 senior risk, compliance, audit and legal executives at financial firms including banks (53%), insurance companies (21%) and asset management firms (12%).
Figure 1. Rank the complexity of the regulatory compliance challenges in your organization (Risk.net April 2019 study)
Organizations struggle to make risk an enterprise-wide concern if the people responsible for controlling these risks find risk assessment tools difficult to use. The goal is for staff to understand, appreciate and effectively use – or adopt – GRC solutions. User experience, or relative effective ease-of-use, is a key driver of engagement. So how can organizations drive strong user experience and engagement with GRC tools to fuel effective use of the tools?
One way is using people-focused design thinking that delivers user-friendly APIs, an end-to-end platform, highly accurate alerts and automation of mundane tasks. Another is a low touch, zero training model. Dynamic dashboards, ready visualizations and task guidance for the most critical information and required activities all support quick adoption and productivity as well.
Innovative and updated technologies also help close gaps between users, requirements and capabilities. Artificial intelligence (AI), which includes like pattern recognition, predictive analytics, self-learning automation, and natural language processing can provide fast, accurate alerts for the 1LoD. These go a long way towards greater success and speed in delivering on their risk-related requirements and decisions.
“Organizations struggle to make risk an enterprise-wide concern if the people responsible for controlling these risks find risk assessment tools difficult to use. ”
A key use of AI is to reduce time spent on mundane tasks while putting the focus on higher-value work. The Risk.net study showed 65% of risk and compliance professionals polled agree that the “use of AI and advanced analytics for GRC activities allows employees to focus on more strategic tasks.” Instead of completing complex questionnaires and risk assessments, the 1LoD can use AI-driven risk processes and data to support more risk-aware, competitive actions and decisions in the marketplace.
Download the study to learn more about how using AI in GRC solutions helps organizations deploy their resources to more strategic, value-added activities. To find about IBM tools to succeed in a rapidly-evolving regulatory environment, visit RegTech.com.