Communication Challenges in Risk and Compliance Management

Many organizations find that when they audit a risk or compliance issue to discover the root cause, the main issue is often found that the right information was not communicated to all the involved parties. Wrong decisions are taken by people not because they were not capable of understanding what needed to be done, but because they did not have all the information to reach the right decision.

This can result in organizations to focusing on improving communication between the different departments and teams. These problems can be improved through trainings and activities that encourage more communication and outreach within the organization’s departments. Some organizations also focus on providing avenues of communication between the departments. These avenues range from software solutions to foster communications or periodic meetings where everyone learns about what the other departments are doing.

However, it is important to understand that communication problems are not the problem – these are symptoms of the problem. If departments are not communicating with each other, the answer is not to simply make them communicate with each other more often. Communication happens in environments that are conductive to communication. Instead of asking implies to talk to each other more often, managers need to focus on process and organizational improvements that will result in employees communicating more often.

The idea of communication breakdowns being a symptom for organizations is explored in this Harvard Business Review article. The idea links directly to risk and compliance management and the failures in communication can be seen in both domains.

Communication in Risk and Compliance

Communication is an essential part of risk and compliance management. Risk managers need to have information about risks across the organization. They cannot monitor all the activities throughout the organization, which is why they need other people to inform the risk team if there is any activity that is increasing risks. Similarly, compliance managers also depend on communication from the rest of the organization. The compliance team will be able to perform much better if other departments were more forthcoming about the issues in compliance they face and processes where ensuring compliance is difficult.

This communication often fails to happen. Risk and compliance teams end up discovering problems through their own audits or monitoring processes. It is critical that organizations understand why this occurs. The other departments within the organization often have no visibility into risk and compliance processes – they only know the requirements they need to fulfill to manage risks and ensure compliance. This means that they may not understand the impact of different processes on the risk and compliance management frameworks.

In simpler terms, important information is not communicated to the risk and compliance departments not because other employees do not want to communicate with risk or compliance teams, but other departments do not have the information and knowledge required to understand what needs to be immediately communicated to the risk and compliance teams. Solving this problem requires a different approach – instead of encouraging communication, the focus needs to be on making risk and compliance information accessible.

Solving the Communication Problem in Risk and Compliance

Many modern organizations have gone back to the drawing board to understand how they can improve risk and compliance management and in doing so have found that making risk and compliance accessible provides sustainable improvement. Modern risk and compliance management platforms are built on the same framework; these platforms solve the communication problem by providing everyone risk and compliance visibility.

Instead of risk and compliance requirements are just a piece of the puzzle, that is the risk and compliance management framework. Previously, most teams only had their own piece of the puzzle – they only knew their own risk and requirements. They had no idea how their piece of the puzzle fit together with other pieces to create a successful risk and compliance management framework. Modern risk and compliance management platforms link each risk and compliance activity back to the regulations and metrics that are affected by said activity.

This means that when an employee from another team looks at their risk and compliance related tasks, they can easily see which risks are being managed through controls related to the tasks and which regulations are applicable to the task. They have much more information and context about the risk and compliance requirements to must fulfill. This improves their approach towards risk and compliance because they understand why they need to do what they need to do.

Another major benefit is that they also understand risk and compliance better, which improves their ability to detect risk and compliance failures. They are therefore much more likely to approach the risk and compliance teams with concerns and issues as it is now easier for them to understand which things need to be immediately reported.

Interested in seeing how your organization can enable better visibility into risk and compliance and improve the way other departments communicate with the risk and compliance teams? Get in touch with our experts for a demonstration of the Predict360 Risk and Compliance Intelligence suite, the American Bankers Association endorsed solution for risk and compliance management.