Managing Compliance Risks Needs Synergy Between Culture and Technology

Managing compliance risk in banks is an important objective of management but having the wrong culture makes it hard to achieve improvements in compliance levels. Management can focus on compliance, create strategies to improve regulatory compliance, and much more but they will not receive the results they need without the right culture.

What is a Culture of Compliance?

A culture of compliance is a work culture that is naturally compliant. In organizations that have a culture of compliance all business processes are carried out while staying compliant from the inception. Then there are businesses where compliance is treated as an external factor that affects the business. Employees treat compliance like an annoying obstacle to the efficiency of their work. Compliance exists in such places but often only out of fear of reprisals over being non-compliant. Such cultures are inherently more prone to compliance risks.

What are the different types of compliance?

Compliance is a vast field, dealing with many different types of compliance. The most common usage of the word compliance refers to regulatory and legal compliance. Every business must ensure that it complies with the rules and regulations that apply to their industry. Another type of compliance is complying with an industry standard. Businesses need to comply with rules for important certifications such as ISO certifications. Restaurants need to comply with certain regulations if they want their food to be certified kosher or halal. There are quality standards which come under compliance as well.

Why Culture is so Important when it comes to Compliance

Compliance would not need the right culture if it was a one-time activity which employees could focus on momentarily to achieve great results. Compliance governs the way banks and financial institutions operate, which means that compliance needs to be continuous. An employee doesn’t have to be conscious about compliance during a particular time or activity; they need to continuously be compliance conscious for compliance levels to increase.

Another major problem is that it is impossible to supervise for compliance. Since compliance is an on-going activity, supervision would require micromanaging each employee of the banks, which is simply not practical.

Using Technology to Enable the Right Culture

Understanding the role of technology in changing the culture of compliance is an important step towards improving the compliance levels of your organization. Culture, most of the time, is not intentionally created. It naturally forms based on the environment. Having no compliance technology implement makes it easy for a non-compliant culture to form. If there are no compliance checks and balances and if compliance is hard to track and manage then the employees will not be consciously compliant.

Another very important factor is that it should always be easy for employees to be compliant. Many organizations emphasize the importance of compliance to their employees and make sure that all mistakes are properly audited and corrected, but they never make it easier for people to be compliant. If an organization keeps having compliance problem, there is a compliance culture problem. One big possibility is that the employees have not been given the compliance management tools they need.

Not having the right tools makes it hard to manage compliance risks (PDF link). Employees may unknowingly go against compliance requirements because they were never provided the training materials or literature which would help them understand compliance. Another problem is that compliance is difficult to enforce for the employees if they are not given the right tools. If one of your employees wanted to make sure that all the data files that they created are compliant, how would they do it? Manually going through the files and checking them all? This would be highly inconvenient and would take up a large amount of time.

Compliance Risk Management Simplified

The simplest way to manage different types of compliance risks is to make compliance so easy that there is no reason to be non-compliant. A compliant management system makes it harder to be non-compliant. The checks and balances built into the system catch compliance violations instantly which gives the employees instead feedback and an opportunity to fix the problem. The nature of compliance within the organization itself changes; instead of compliance being an invisible barrier which the employees may unknowingly breach, compliance becomes a clear path they can take to work the right way.

If you are concerned about managing compliance risks, you have come to the right place. American Bankers Association has endorsed our Predict360 Compliance Management System. Predict360 helps organizations quickly achieve better compliance results. It is a cloud based solution which can be implemented within a day or two and immediately starts improving compliance. If you want to test the system within your organization to see how beneficial it will be for your organization, get in touch with our team. They will provide you a trial subscription without any financial (or otherwise) commitments to test.

About the Company

360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence.

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