Despite Recent Record Fines for Compliance Breaches and Control Failures, Lack of Preparedness Remains a Top Concern
Financial services organizations operating in Asia face a number of key challenges and a lack of preparedness in some countries and risk areas, according to survey analysis published today by Wolters Kluwer Financial Services and Asia Risk. The number one concern of over one-third of respondents was regulatory, reputational or operational risk, three categories where effective risk and compliance processes can be attained by synergies in information and activity across corporate governance, risk management, regulatory and internal compliance functions.
The company surveyed more than 800 governance, risk and compliance professionals across Asia-Pacific and found disparate challenges within the region. The data shows that in developed countries, such as Australia, Hong Kong and Singapore, regulatory risk was the biggest concern. This contrasts with Indonesia, where more respondents were concerned about operational risk, and Thailand, where the biggest worry was credit risk.
The common tie was the need for large financial services organization to focus on coordination of people, processes, technology and information across the independent three lines of defense. Nearly 30% of respondents said that risk, compliance and internal audit functions were using inconsistent methodologies and not communicating with one another effectively.
“Compliance with regulation is something that firms are right to consider a high priority and co-ordination across business lines is key to meeting regulators’ demands,” noted Matthew Sullivan, a general manager at Wolters Kluwer Financial Services in Asia Pacific. “An effective approach to GRC accommodates interconnected oversight of each business segment, which helps mitigate risks and reduce compliance breaches, thus avoiding potential reputational damage and financial losses.”
In developed markets where banks are more likely to be operating with an advanced GRC framework, nearly 90% of those polled said they were “prepared” or “well prepared” to comply with current and emerging rules and regulations. Overall, though, Sullivan observed there could be a degree of complacency indicated by the survey responses, compared to the reality that these banks find themselves dealing with. Over 25% of respondents did not believe their current GRC technology was sufficient to meet their needs.
“Respondents generally believe they have an adequate system in place but the system isn’t sufficient to meet their needs due to lack of automation, a critical requirement in being able to synthesize increasingly large amounts of data across different functions” added Sullivan.
Lack of budget and disagreement of ownership of a GRC solution were two impediments to achieving the necessary technology, according to survey data. One-fifth of respondents said they have no automation in place due to insufficient financial resources. In developed markets, risk managers take ownership of GRC more commonly than in emerging markets, where “insufficient support from senior management” was cited by a number of respondents.
The findings emphasize the need for financial services organizations to automate compliance workflows, detect risk policy breaches and streamline response decisions. These efforts empower risk managers to take action in real time, so they can stay ahead of the curve and keep their organizations out of the headlines.
The full survey analysis can be found on Risk.net.
About Wolters Kluwer Financial Services
Wolters Kluwer Financial Services provides customers worldwide with risk management, compliance, finance and audit solutions that help them successfully navigate regulatory complexity, optimize risk and financial performance, and manage data to support critical decisions. With more than 30 offices in 20 countries, our prominent brands include: AppOne®, AuthenticWeb™, Bankers Systems®, Capital Changes, CASH Suite™, GainsKeeper®, NILS®, OneSumX®, TeamMate®, Uniform Forms™, VMP® Mortgage Solutions and Wiz®. Wolters Kluwer Financial Services is part of Wolters Kluwer, which had 2014 annual revenues of €3.7 billion ($4.9 billion), employs 19,000 employees worldwide, and maintains operations in over 40 countries across Europe, North America, Asia Pacific, and Latin America. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.