Misguided, mismanaged and misunderstood. How to provide easy to understand key information supporting fundamental C-Level decisions in the years ahead?
Due to the sheer mass of available data organisations are missing an ongoing and real time monitoring of external and internal data and information allowing them to identify internal weak points (e.g. compliance failures, risk management issues, etc.), provide an early detection of risk relevant web content and comprehensively communicate the actual risk situation to all management levels. With the offered web-based service Dydon is providing a solution to this problem corporations have been struggling with for years.
In this post I illustrate the importance of monitoring and measuring compliance as a new regime in compliance management. In a follow up post I will describe how artificial intelligence and machine learning methodologies help to overcome the issues pointed out above.
For too long, the various internal and external indicators have been micro-managed by the bifurcated silos within organizations. Such encapsulations have managed their own risk and compliance management without the purview of what it may mean for the broader organization.
Market Need For Compliance Monitoring
Recent social, ethical and legal developments urge corporations to tackle compliance (regulatory, conduct, social, environmental, etc.) as a top management priority. Much money is paid to internal and external consultants to asses and measure compliance. Yet producing an annual report, which aggregates a mass of internal historic data, no longer satisfies the decision-making needs of today’s management boards.
Questions like:
- “What is my personal exposure?”,
- “What are our costs of compliance compared with our competitors?”,
- “Where are our weak points? What can we do to eliminate them? And what will it cost?”
- “How will changes in regulations impact my business?”
- “My competition is in social trouble. How would the impact be on us? How are we perceived on the market?”
need instant answering as circumstances change.
“If you think compliance is expensive – try non-compliance.”
Former U.S. Deputy Attorney General Paul McNulty; 2007
An enormous amount of destructive venom continues to pour out from all corners of the planet, fingers point to blame everywhere. Grandstanding or not, public statements can cause enormous shocks and risks.
At any time external events (new regulations, social media storm, fines to competitors, etc.) can trigger a complete re-evaluation of the organizations state of compliance. Constant monitoring of the economic environment and socially “expected behaviour” is not only vital for marketing divisions, but for CEOs, board members yet the whole corporation. For too long, the C-Level has allowed Senior Leadership to manage the organization, taking a hands-off approach.
To overcome this Dydon offers the service which continuously combines, rates, analyses and compares
- comprehensive, up-to-date information and knowledge from the web, specialized services (e.g. for reputation risks) or databases (e.g. global regulatory fines database),
- with the classic risk practitioner’s view on internal and external risks and threats using corporate data
- providing answers to these questions using most advanced artificial intelligence techniques and methods.
According to Gartner, the entire GRC market is subject to change from backwards looking to a simultaneous forward and backward looking mode (http://blogs.gartner.com/john-wheeler/looking-ahead-with-gartners-grc-hype-cycle).
Dydon therefore provides the C-Suite with their own assurance on how effective Senior Leadership is doing as well as the external perspective.
Market Need For Compliance Measurement
Significant loss of trust not only within the financial services (FS) industry but also in many others (as the current VW scandal clearly illustrates) is on a historic scale. In the eyes of many, this failure was the result of a conceptual failure in regulatory design, which tended to rate efficacy with reference to retrospective financial accounting. The dramatic fall in public confidence in the British FS industry has led to a UK national regulator, the FCA (Financial Conduct Authority) by 1st of April 2013. The FCA has begun to produce far-reaching recommendations on how to control banks’ behaviour in financial markets. While the UK regulation has set the course regulators around the globe are following their example.
“People need a financial industry they can trust – success for the FCA (Financial Conduct Authority) will be when both consumers and firms rebuild that bond of trust”
Martin Wheatley, Former FCA CEO, FCA Risk Outlook 2013
Top managers around the globe are waking up to their personal exposure to regulatory risk. New regulatory regimes in almost all industries ensure that senior management will be held personally responsible, and personally financially liable, for their firms’ in-effectiveness related to compliance issues. Consequently managers demand that the level of their firm’s corporate compliance effectiveness, efficiency and quality is measurable, audit-able and comparable (via Benchmarks) at any time, enabling them on a constant base to “prove” compliance to the regulator’s satisfaction.
In recent articles a paradigm change in measuring compliance is requested. In the past corporate compliance effectiveness has been assessed in qualitative text documents only leaving the top management with the need to read through hundreds of pages. Irina Jaekel (editor in chief of the German compliance manager magazine) underpins in a recent article (compliance-manager.net) the necessity to make compliance activities measurable. Not only does latest regulation (e.g. ISO 19600 point 5.3.4) request the establishment of compliance indicators but more importantly top management needs to be able to understand compliance efficiency in a very short time and easy to digest (e.g. via aggregated KPI information).
Today advisory and consultancy firms offer and conduct compliance audits as a lengthy yet manual and mostly Excel based processes with a yearly review cycle. Any of such quite costly and time consuming audits are only representing a timing based analysis on the internal question: “How well does the corporation comply with any internal or external rule or regulation?”, but they are incapable to confirm to management timely upon request that all is OK and compliant.
Summary
In present troubled times top executives and boards are flooded with information making it difficult to take the right decision within the short time available. Thus, they are eager to receive most recent information and assessment results in a simple, easy to understand and interpret fashion. The Dydon service perfectly supports this key management requirement by presenting gathered information, generated results, identified risks and their mitigation options, historic data and predictive analysis via easy to read and handle dashboards.
Within a follow-up post I will describe how Artificial Intelligence and Machine Learning methodologies are used by the Dydon service to solve this big-data driven dilemma. It will be illustrated how externally captured, read and filtered information is intelligently combining with key internal data and how generated results can be presented in an easy to understand and communicate fashion.
