One key take-away of the seminar involved practical ideas about how to structure regulatory change management processes. Leading regulatory intelligence solutions now scan hundreds of regulatory sources on a daily basis. These solutions alert financial institutions with role-based, tailored notifications that summarize the content of the regulatory update and suggest which policies and controls need to be updated.
During the last two years, standardized solutions to regulatory change management have matured significantly. The main driver behind this leap in supply-side sophistication is financial institutions’ need to restructure and automate the way they manage changes in regulatory requirements. Efficiency is particularly important for small- and mid-sized institutions that have seen their cost base rise relative to larger institutions (link to source). Typically, over the years, financial institutions have responded to the increasing number and scope of regulations by increasing their workforce in risk, compliance, and legal functions. Until now, process development and lean thinking have lagged behind.
The starting point for managing any change is having a clear understanding of the current situation. For financial institutions looking to improve regulatory change management, the first question to ask is how well the current processes are understood and linked to current requirements. In practice, this means creating a structured list of what regulations are in scope, what the requirements are, which internal policies and guidelines are connected to which requirements, and which controls ensure compliance with a particular policy. Complex institutions with a large geographical footprint, multiple business lines, and clearly defined lines of defense need a strong technology platform to manage the complexity of requirements, policies, and controls. This is where GRC platforms come into play; they offer an enterprise-level capability to standardize ways of working across separate business units regarding regulatory risk management.
Acquiring a new technology is easy. Restructuring processes and making change stick is difficult. A financial institution that wants to make its regulatory change management leaner and more structured needs to take on the challenge and ask the question: What does a good operating model look like in my context? BearingPoint helps financial institutions to streamline and structure regulatory change management. Our services include defining operating models with roles and responsibilities and offering support for selecting the the best technology to meet each business’ unique needs.
Katja Mäkelä (Senior Manager, Financial Services)
Osmo Timonen (Manager, Financial Services)