Staying ahead of regulatory changes today is no longer just a challenge; it's a daily cause for concern. The pace of regulatory evolution has reached unprecedented levels, with a staggering 220 daily changes reported globally – according to 2019 research from Thomson Reuters.
The Financial Services industry in particular is undergoing rapid transformation, marked by increasing complexities and regulatory compliance demands. It is crucial for financial institutions to efficiently meet evolving regulatory standards, yet it is becoming more difficult by the day.
The real cost of compliance chaos
The escalating volume and complexity of regulatory requirements is having a palpable impact on organizations. Total fines issued to financial firms between 2009 and 2020 approached $345 billion.
But the real cost of risk compliance chaos is not just monetary; it extends to operational inefficiencies, reputational damage, and legal consequences.
Whether it's amendments to data protection laws, financial regulations, or environmental standards, the repercussions of regulatory change events are far-reaching. Organizations need a comprehensive understanding of how these changes directly impact their operations, requiring not only reactive adjustments but also proactive measures to stay compliant.
In the regulatory landscape, what holds true today may not be applicable tomorrow. Even if organizations are on top of compliance requirements today, there is an inherent unpredictability to regulatory changes. As regulatory burdens continue to grow, organizations must recalibrate their compliance strategies to ensure resilience in the face of constant change.
3 major recent regulatory priorities
1. Operational Resilience
The combination of COVID, the rise in the frequency and magnitude of other major shocks, and attention from financial services regulators have placed operational resilience firmly in the spotlight, and it remains one of the top priorities for regulators around the world.
Financial Services firms in the UK must now comply with the Financial Conduct Authority’s (FCA) PS21/3 Building Operational Resilience standard; in Australia, it’s the Australian Prudential Regulatory Authority’s (APRA) CPS 230 Operational Risk Management standard. In Europe, the Digital Operational Resilience Act (DORA) lays out similar compliance mandates for digital resilience.
2. Sustainability Reporting
Global regulations on ESG, materiality, and sustainability are rapidly increasing and evolving. Recent years have witnessed a surge in ESG-related mandates, covering a vast range of areas including climate change, modern slavery, executive pay, and diversity. Companies are increasingly required to adopt robust ESG practices, adhere to standards, and disclose detailed information on sustainability risks and performance.
The recent Corporate Sustainability Reporting Directive (CSRD) in the European Union mandates 'double materiality,' requiring organizations to consider social and environmental impacts alongside financial ones. By 2026, CSRD is expected to apply to small and medium-sized enterprises in addition to large European-based companies.
3. Consumer Duty and SM&CR
The FCA recently published new standards to set higher and clearer standards of consumer protection across financial services with PS22/9: A new Consumer Duty, which requires firms to demonstrate they are putting their customers’ needs first.
The interaction between the Consumer Duty and the Senior Managers & Certification Regime (SM&CR) is characterized by clear senior management responsibility for regulatory compliance. The new Consumer Duty regulations introduce an individual conduct rule under the SM&CR, stating that individuals must act to deliver good outcomes for retail customers.
Meet the demand with a GRC software solution
The real cost of non-compliance is too high to ignore. By staying informed, adopting agile strategies, and implementing sophisticated GRC approaches, businesses can not only navigate the complexities of today's regulatory landscape but also position themselves to thrive amid the uncertainties of tomorrow.
A holistic solution like Ansarada GRC supports a comprehensive and integrated strategy for managing risk and compliance, and delivers a structured way to stay on top of changing regulatory requirements. By consolidating processes and leveraging technology, businesses can streamline compliance efforts and enhance their ability to adapt to regulatory changes efficiently.
Two standout features in the Ansarada GRC solution that can transform how your organization handles regulatory updates are the Obligations Module and TriagePRO horizon scanning.
- Seamlessly integrated into Ansarada GRC, the Obligations module provides a live feed from LexisNexis, ensuring your organization stays informed and ahead of the curve on regulatory developments. Beyond updates, this module empowers proactive creation of processes and controls, enhancing your organization's agility to react swiftly and shape compliance strategies for the future.
- Alongside the Obligations module, Triage PRO simplifies horizon scanning by consolidating all your news feeds into one centralized location. It automatically notifies and tasks relevant individuals, allowing you to evidence steps taken upon receiving information. Triage PRO provides sophisticated tools for notification, task generation, and a central hub for news feeds, streamlining compliance management in a dynamic regulatory landscape.
Explore these transformative features with a demo of the Ansarada GRC platform today. Ask us about our new Operational Resilience module, and our free ESG gap analysis and benchmarking tool.
This blog was originally published on Ansarada.com.
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