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4 Ways to Ensure Regulatory Compliance

Posted by: Sarah Hamilton

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Regulatory compliance is a necessity for organizations. It ensures that risks are kept at a minimum and a violation in regulatory compliance can result in hefty fines. Regulatory compliance is not just a process that can be done once – when done correctly, it becomes an integral part of the way an organization operates.

Companies often have trouble with regulatory compliance because it requires constant vigilance. New regulations must be parsed and analyzed, old policies need updating, and so on. It needs to be ensured that there are no conflicts if one part of a certain policy or regulation changes.

4 Ways to Ensure Regulatory Compliance

Creating risk ownership

To ensure vigilant regulatory compliance, it is important to change the way risk ownership is handled in organizations. Risk should not be something which only the risk and compliance department worry about – it needs to be something which every department factors into their decision making. McKinsey, in their report titled A best-practice model for bank compliance lists risk ownership expansion as the first thing companies need to do to improve organization-wide compliance.

Risk ownership is important because it allows for far more compliance related vigilance than otherwise. The person who is taking risk ownership is a person directly involved with the work. This allows them to determine with precision what compliance issues can occur if a process is carried out in a certain manner. These people have more intimate knowledge about the practices of the organization than someone from a dedicated risk or compliance department would.

The organization will still need people dedicated to compliance and risk, but they will be the second line of defense. The risk department should not be the first line of defense; that duty belongs to the people within the department. It is important to inculcate a culture that makes compliance and risk ownership important to everyone in the organization. It is the best practice to ensure organization-wide compliance.


Automation isn’t just the future of business – it is the present as well. Automation is transforming industries and business processes in every industry. It has proven to be particularly useful in the financial industry, and is driving some of the most successful financial institutions in the world.

However, one thing has recently changed when it comes to automation. It is no longer out of the reach for mid-sized or even small organizations. There are many smart automation solutions which are designed to deliver performance for mid-sized organizations. These solutions are priced and designed to be suitable for community banks, specialized loan institutions, credit unions, and other similar financial institutions.

Automation is perfect for work that involves processing and tracking changes in information, which is why it works so well in compliance. Automation takes over the administration and tracking part of the work – meaning your compliance officers can focus on implementing actual compliance measures instead of administration and monitoring. Mark Brotherton, the Director of Fraud & Financial Crime in Lloyds Bank Commercial Banking said it best in a report titled Automation will set compliance officers free. His main point is that since automation takes care of the menial tasks, compliance officers can perform meaningful and value addition related work. Not only does it result in better performance and compliance for the organization, but it also results in increased job satisfaction for the compliance officers.

Integrated approach

Management can only control what it can see; any information that fails to reach management cannot be acted upon. It is very worrying that many companies are still using departmentalized approaches towards compliance. Using different compliance solutions in different departments gets the job done, but poorly. The problem isn’t that risk does not get managed within the departments – it does. The problem is that there is no company-wide view of risk and compliance.

Let us restate that – in such a scenario, the management cannot assess the risk exposure or regulatory compliance issues. Every tool has its results displayed in a different manner, meaning that there does not exist one framework within which all could be displayed or understood. This opens the company to huge risk.

This departmentalized approach results in compliance flaws that do not get discovered until it is too late. Using an integrated approach in which organization-wide compliance is handled within one framework is the only true solution to this problem. It allows management to view the compliance measures and regulatory compliance issues of the whole organization in a single click. It allows for instant reporting as well. Management can find out about any issues in any department without needing to contact anyone in that department and demanding a report.

This means that companies can take a proactive approach in compliance. If two departments are in conflict of each other when it comes to compliance, it will be made apparent the moment the conflict appears, since both will be within the same framework. It also tells management which departments need more focus for compliance.

Changing the organizational culture towards compliance and risk management

There’s a very human reason many organizations have problems with compliance – regulatory compliance is often seen as an obstacle. Organizations have a culture of devising up a strategy or plan and then checking to see whether there are any regulatory compliance or risk related problems with it. This approach pits regulatory compliance as a limiting factor for how much the company can innovate.

Regulatory compliance is not an obstacle – it is the best way of doing something. Organizations need to stop considering compliance and risk issues after making plans – they need to integrate them in their planning from the beginning.

This isn’t just a change in attitude – this results in real organization-wide change. An organization that is already aware of regulatory compliance needs will devise plans and strategies that are compliant from their roots. These strategies and plans will not be designed around or despite regulatory compliance; they will be designed with regulatory compliance in mind. This results in the organization being ‘naturally’ compliant in all their activities from the start.

A report by Deloitte in Wall Street Journal’s Risk and Compliance Journal gives an example which proves the importance of culture. It talks about organizations with some of the biggest financial and compliance related scandals. The important thing to note is that these organizations had some of the best ethical and financial codes of conducts, and were notable for how great their compliance measures were.

Yet, these compliance measures and ethical codes existed only in documentation. It isn’t enough to just create policies or compliance calendars – companies need to foster a culture of compliance if they want true regulatory compliance. To change the culture, it is necessary that companies provide their employees with the right compliance tools. If compliance is too complicated or too out-of-reach for most employees they will ignore it. They shouldn’t, but that is just how people function – they avoid things that are too complicated. Therefore, it is important to have integrated tools that show compliance measures and issues to all the parties involved in an easy to understand dashboard.

About the company

360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence.

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