STEPS TO IMPLEMENTING A RISK AND COMPLIANCE FRAMEWORK
As the pace, complexity and impact of change affects every industry, the need to proactively manage and mitigate risk while ensuring that the business remains compliant is key. Densely interconnected regulatory frameworks, tied to more severe penalties, are increasing the need to make risk and compliance management a critical part of operational and strategic decision making.
2018 saw the launch of the revised Markets in Financial Instruments Directive (MiFID2) and the Second Payment Services Directive (PSD2) regulations, as well the implementation of the General Data Protection Regulation (GDPR). In light of these regulations, many financial services companies have found that their non-compliant systems have required more testing and work than initially anticipated. Over the next couple of months, banks will be directing their focus to their internal processes, ensuring that they achieve compliance.
With GDPR now up and running, banks are looking to see how they will be able to operate going forward. According to Duff & Phelps, firms typically spend 4 percent of their total revenue on compliance, but that could rise to 10 percent by 2022.
Keeping up with the tracking and reporting required to achieve regulatory compliance is a time intensive and costly process. In today’s shifting landscape, risk and compliance goes beyond these requirements, and safeguarding them against wider risk concerns is essential to their success.
However, with the debate around complying with these upcoming regulations dominating the headlines, what does implementation actually look like? What are the steps required to ensure a business consistently remains compliant?
Jul-Sep 2018 Issue