How Risk and Compliance Technology Helps Financial Organizations Grow 

Financial organizations can choose to expand in several ways. They can add more product lines or engage a new market. They can expand into other cities, states, and even countries. Some financial organizations also enter partnerships to expand their reach further. Each strategy that is taken has its advantages, disadvantages, and growing pains. Risk and compliance technology solutions are uniquely poised to help businesses transition into a bigger and better organization.

Stages of Growth

Risk and compliance strategies are not the same in different organizations. The risk and compliance strategies are chosen based on the regulatory and market framework the organization operates in and the objectives of the organization. A financial organization trying to stabilize itself will have a different approach to risk and compliance compared to an organization planning to expand to more areas. A small organization expecting growth will create a plan to meet its risk and compliance objectives once it has grown.

Creating different risk and compliance frameworks is difficult in such a situation when risk and compliance are being managed through manual means. The difficulty is further compounded by the growth stage between these two states of the organization – the transition state. A small business does not turn into a big business overnight. A financial organization steadily grows through strategic moves. Transitioning into a bigger organization means many risk and compliance activities will be required to ensure that the business can successfully operate on a larger scale.

Suppose an organization is planning to expand to a new state in the country. In that case, it will need to ensure that its business processes are compliant with the regulatory framework of that state. The risk framework will also have to be updated; all the risks being managed in the framework will be based on the market forces in the market the financial organization is currently in. New risks in the areas where the organization is expanding will also need to be managed.

The risk and compliance teams need to be trained to meet the organization’s new risk and compliance requirements. The business processes and SOPs of the organization need to be re-evaluated according to the new requirements.

The centralized risk and compliance monitoring functionality ensure that the board of directors has a real-time view of risk and compliance throughout the organization, allowing them to quickly course correctly if needed. Click To Tweet

Transition Risks and Activities

As stated previously, a small organization has different risk tolerance levels and risk portfolios than a larger organization. These are not the only two groups of risks that need to be managed by growing organizations – transition risks are critical to monitor and mitigate. These are the risks that can be expected when the business is in a transition period.

Compliance departments also need to complete many tasks and activities related to the transition period. The compliance team needs to ensure that there are no conflicts in the processes determined in the new compliance framework the business will be using as it grows larger. Other departments need to be trained if the business is expecting that new regulatory compliance laws will apply to it. Different regulations exist for different types of products and services delivered by financial organizations. If an FI introduces a new product or service, it will have to ensure that it also complies with the regulatory requirements that apply to that product or service.

How Risk and Compliance Technology Enables Growth

Risk and compliance technology platforms empower businesses to grow while minimizing risks and maximizing productivity. This is achieved through a combination of streamlined workflows, automation, monitoring, and power tools. Modern risk and compliance platforms have risk portfolios and regulatory compliance requirements built-in for different states. Expanding to a new area will mean adding the risks and compliance requirements onto the platform with just a few clicks. While this is just the start, and the risk and compliance frameworks still need to be assessed, a task that would have taken multiple hours or even days is completed in just a few clicks.

The centralized risk and compliance monitoring functionality ensure that the board of directors has a real-time view of risk and compliance throughout the organization, allowing them to quickly course correctly if needed. Training can also be given using the same risk and compliance platform, making the training more accessible and providing visibility for management into all training activities. All the risk and compliance assessment activities are also present on the same platform, resulting in smoother collaborations and increased transparency throughout the organization.

Interested in seeing how your organization can benefit from risk and compliance technology as it grows? Get in touch with our experts for a demo of our American Bankers Association endorsed risk and compliance solution Predict360.