The importance of compliance risk management in the world of banking is ever-increasing. Banks and regulators recognize this importance and are now more concerned than ever before about compliance risk management to sound banking practice. Compliance risk monitoring has become one of the leading importance for banks. Since the 2008 financial crisis, the banking world has faced many challenges including new regulations and increasing adoption of digital banking footprints. A comprehensive risk training is imperative for success of the bank and training needs to be tailored to fit the approach of the Board, Executives, Senior Management, and personnel in maintaining the compliance program. A well-written program and risk assessment can explain your bank’s risk indicators and its measurements to regulators.
There has also been an increase in significance of personnel unit involved in the management of compliance risk. The integration of technology and enhancement of risks only added to the layers of complexity that is compliance risk. To comply with rules and regulations, financial institutions have turned to many sources of guidance. Compliance Alliance is such a resource. Compliance Alliance has the tools necessary to help banks alleviate the concerns of compliance risks they are encumbered with. Compliance Alliance has Risk Assessment, Risk Management, Risk Webinars, and a slew of other tools at disposal for banks looking to gain a competitive advantage. Governance, risk, and compliance, also known as GRC has also had many financial institutions turned to Compliance Alliance to assist with—whether with the ever-popular chat, phone calls, or emails.
Regulations, from Expedited Funds Availability to Home Mortgage Disclosure, to laws regarding privacy of information to internal controls, every facet of the bank is under scrutiny. How do you, as financial institutions, monitor these risks to stay in compliance? How do you go about monitoring them? Let us talk about monitoring of compliance risk. To adequately prepare for a compliance risk assessment, there are five principles: 1. The potential threats and vulnerabilities of the risk itself, 2. The probability of occurrence and the potential impact it can create, 3. The inherent risks that associated with the potential threats and vulnerabilities, 4. The mitigant or mitigating factors a bank can deploy to combat the risks, and 5. The residual risks that remain after apply mitigating controls. A bank must first identify the threat of the risks, then asks what are lacking in the terms of personnel, policy, and procedure.
Ultimately, compliance risk management is incumbent on the bank. To comply, banks have turned to firm such as Compliance Alliance to stay ahead of the game. Compliance Alliance is a name banks should be familiar with and we can augment the services that other vendor provides. Monitoring of compliance risk is one potential hazard financial institutions must employ to not only stay in compliance but elevate the protection of risks beyond what they are capable of. Understanding the risk appetite and culture of your firm. Performing regular risk assessment. And establish a well-maintained compliance programs are all part of a robust compliance risk monitoring.