The fragile equilibrium between compliance and risk management
- Can we talk about compliance and regulations in an exciting way? (spoiler alert: yes we can). If you are a business or compliance executive, it is an important part of your day to day. From the banking to the pharmaceutical industry, through the transportation and retail sectors, regulations are numerous and companies have no choice but to comply or be subject to penalties.
- Beyond constraints brought by compliance, we can see that companies adapt and evolve, that new markets are created and new actors come out ahead. From compliance to risk management, the line is getting thinner. How has compliance brought new opportunities? And how has it become much more exciting than when it was first created?
Compliance : from regulation’s boredom to forecasting opportunities
- Originally, regulations were a constraint imposed by big regulators of telecommunications operators, the nuclear sector, or even the healthcare industry in order to ensure the safety of the solutions set in place and to avoid monopolies. While regulations’ role has always been to guarantee these different points, compliance management from companies has evolved with time.
- How can we show compliance towards regulations in effect today? Thanks to compliance analytics, based on the gathering and storage of data into dashboards, with the goal to analyze them and extract elements necessary to prove compliance. But compliance analytics also allows the company to analyze data continuously, to identify potential issues in a proactive manner and to correct them quickly, as well as providing a predictive approach. Given the constant evolution of regulations, it is not surprising that it has become an essential element within companies.
For the love of risk
- While we were able to originally classify actors into two categories – those who made the rules and those who suffered from them – the situation has thankfully evolved. The evolution of regulations is nowadays an opportunity for new ways or new actors: the upbringing in force of fintechs in the banking industry thanks to the DSP2 directive, giving access to a part of client data, is a perfect example. Including consumers’ groups in discussions also allows companies to get out ahead and continue to innovate by transforming the compliance constraint into a real engine for the community. It is no longer the regulator that has to be convinced, but the consumer.
- This evolution has allowed compliance analytics to stand out within companies: it is no longer only a response to new regulations; it has also become a risk management tool as a whole. It is not surprising that, according to a Forrester Analytics study, 22% of companies are now setting up risk management analytics, and a third of them are planning to develop their risk management analytics department already implemented.
- To illustrate the current importance that risk management is taking within compliance, let’s take the example of the pandemic and the vaccine race. Laboratories such as Pfizer or Moderna have taken the risk to develop ARNm vaccines while few believed in them. By leaning on constant and conform data, they were able to offer a different approach to vaccination while innovating in an ultra-regulated setting.
Nowadays companies that gain the most are those that are able to profit from risk management. There is no secret: the most successful organizations are those who manage to gather data quickly and exploit them at scale.