5 Benefits of Effective Compliance Management Solutions

Posted by: Raza Shahid | January 24, 2018

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In the aftermath of 2007 housing bubble and market crash, the banking world has inculcated a changed vision towards liquidity risks. This spontaneous change in the outlook has been responsible for the creation of new regulations by regulatory bodies like Federal Reserve Board and Office of the Comptroller of the Currency. A number of studies have been done by speculators and experts with the intention of devising a perfect strategy for countering liquidity risks. A study done by Centre for Research in Economics and Management has ended with the conclusion that higher liquidity measured by a credit risk ratio is associated with low profitability for bigger players in the banking industry. However, for smaller banks there is a positive relationship between liquidity and profitability. Therefore, it becomes imperative for small- and medium-scale banks to cut down on liquidity risks by employing a sound and foolproof system. An efficient Compliance Management System (CMS) not only helps in cutting down the number of liquidity risks, but also reduces other financial and security risks prevalent in the market. Such a software system can be procured for risk-free operations in the turbulent banking world.

For an in-depth look into why manual compliance management results in problems be sure to read our blog “Why Managing Compliance Manually is a Sisyphean Task”

Checklist for Reducing Cost of Compliance

Bank Managers and Liquidity Risks

Banks perform the task of converting liquid assets into illiquid assets like loans. This task is riddled with risks and requires effective management for it to be fruitful in the long run. As managers in smaller banks have a greater role to play in the decision-making process, they are at a greater risk for getting lambasted for their actions than the managers in larger banks. It is imperative for them to procure an effective Compliance Management solutions to help them perform their duties and reduce risks. Let us discuss the top five benefits of Compliance Management System:

5 Benefits of an Effective Compliance Management solutions

1. Helps Maintain Business Process Workflow to Minimize Risk

Compliance Management solutions comes with a variety of features with amazing benefits, the most important of them being its ability to integrate a variety of business processes. It serves as a central repository where business critical information is saved and can be shared amongst stakeholders. By allowing selective and restricted access to employees, it ensures members of the organization receive only the intended information that they are authenticated for. Proper dissemination of information eliminates silos and makes for a well-connected work environment. It is extremely beneficial in companies with a complex multi-department system.

As we have prepared a blog on “Holistic risk and compliance management” which will give you more better understanding.

2. Ensures Security of the System via Authentication

As mentioned in the previous point, in CMS, employees are authenticated before they gain access to the organization’s portal. This means vital information never ends up in the wrong hands. Authentication is an important security feature of the Compliance Management solutions and one of its major benefits.

3. Helps Assess Risks in Multiple Areas

A CMS helps in assessing risks in all Governance Risk and Compliance (GRC) functional areas. The major areas covered by CMS are:

  • Internal audit
  • Risk registers
  • Quality management
  • Finance and operations
  • Competency
  • Regulatory compliance and reputation

By assessing risks for all the aforementioned fields and disciplines in the GRC, it provides valuable inputs that can be used to eliminate liquidity and market risks.

Here we have crafted a separate detailed blog for “GRC Based Risk Mitigation Strategies”.

4. Helps Map Requirements with Activities

By employing an CMS, every audit and corrective action can be mapped to the requirements that drive the activity. As requirements change, the management process also changes accordingly. This mechanism helps drive the management process forward. This is visible across the organization. Notifications can be assigned on the Compliance Calendar for the responsible staff for activities completion.

5. Collaborates with ABA Policies

The American Bankers Association (ABA) is an advocate of the rights of American banks and plays a vital role in regulatory procedures. Compliance Management solutions works in collaboration with ABA policies and helps in the proper functioning of banks and financial institutions. By working according to the guidelines set by ABA, it helps in reducing the number of liquidity and financial risks.

Gain Ground on Your Competition with the Power of Artificial Intelligence (AI)

For the purpose of effective risk management, the power of AI can be harnessed in the form of the Predict360’s configurable Compliance Management solutions. This cutting-edge software has the ability to identify, quantify, monitor, and manage risks; and it can help a great deal in improving risk and compliance management processes employed in banks and financial institutions.

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.Remain up-to-date on industry news/updates through our Twitter & Linkedin profiles.