Complimentary E-Guide: The Role of Technology for Regulatory Compliance in the Insurance Industry

Increasing regulatory pressure is leading to a huge surge in compliance and risk jobs

Posted by: Paul Dempsey

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The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry of Australia is having a direct effect on the number of job advertisements being posted for risk and compliance jobs. This phenomenon is not unique to Australia – similar bumps in job advertisements have been seen all around the world due to regulatory pressure. Whenever an important regulatory or auditing body releases a report highlighting the lack of enough compliance or risk management, we see a surge in the number of job advertisements and personnel employed for compliance and risk.

The data was revealed by, which is the most popular job seeking website in Australia. Their report released on September of 2018 revealed that risk and compliance job advertisements had increased a total of 122% in the past five years, with a significant 48% increase this year. These stats show the delicate balance that banks and financial institutions need to strike when it comes to compliance budgets and highlights a growing problem in the industry.

Compliance and Risk

Keeping up with compliance and risk requirements

The attitude and approach of regulatory bodies has changed a lot in the past few years. They have started focusing not just on the compliance violations that took place, but also on what measures are in place to prevent any such violations. The regulations and laws that banks must comply to keep growing and banks are finding it hard to keep up.

Their current approach is simple – they need better compliance coverage and thus they are hiring more compliance professionals. While this may seem like the most obvious solution, delving a bit deeper into the subject reveals that this may not be the right approach to take. The reason? The costs associated with such an increase.

Compliance personnel constitute the biggest expense for compliance department budgets, and not by a small margin. A survey of community banks found that labor cost was the most major cost for compliance department in banks, to the point where personnel costs alone were more than seven times bigger than the rest of the costs combined. If a bank decides to increase the number of compliance professionals employed to improve compliance levels, they are making the most expensive and least cost efficient decision.

Augmenting and empowering the compliance team with technology

It is easy to deduce why so many compliance and risk job posts are created after every such report. When management sees that the regulatory bodies are not happy with how the industry is handling risk and compliance they know that it means increased scrutiny in the future. They then look at the compliance department to see how it is performing which makes them realize how overworked everyone is in the compliance department. They thus decide to hire more people, to lower the burden on the existing employees, which should result in better performance.

The problem with this approach is that it misses a key piece of the puzzle – that a lot of the work that is burdening the compliance department can be automated, which will free up the time of the existing compliance employees. Surveys show that compliance professionals spend almost half of their work hours doing administrative tasks or keeping up with the latest regulations. Compliance management systems do not require any administration – most of the administrative work is automated. Regulatory change management systems automatically alert the department with any new relevant regulations.

Implementing such systems in an organization can almost double the productivity of the compliance department. There is an important point which should not be overlooked: the compliance department will not need to work harder, it would just be working much smarter. Compliance labor is expensive because compliance jobs require a lot of education, training, experience, and certifications. Banks hire these highly qualified people but do not give them automation based tools. The result is that some of the most qualified people in the organization spend half their work hours simply editing and managing documents and reading new regulatory changes.

GRC is the smart solution

Cloud based GRC solutions cost significantly lower than hiring new compliance professionals. Instead of doubling your compliance team, which will be prohibitively expensive, focus on doubling the productivity and efficiency of your current compliance team by giving them access to GRC compliance technology.

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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