In a recent post by RegTech firm Clausematch, the company asked the question: are firms managing compliance in a black box?
Risk and compliance management can be seen as a metaphorical “black box”, a term used in science and engineering to describe a system understood only by its inputs and outputs, with its internal workings hidden or “opaque”.
Often, this approach leads to inadequate programmes that lack proper documentation, are hard to track, react rather than preemptively act, and rely more on individual abilities over systems and processes.
If any of these symptoms are recognised, Clausematch said it is time to reconsider some of your compliance processes and shift to a “white box” approach where the internal components and logic of the system are transparent.
The firm said in its dealings with financial services institutions and heavily regulated companies, it frequently finds that the Achilles heel lies in antiquated, inefficient compliance document management methods.
A system that is purpose-built for compliance often gets brushed aside as a “luxury” or a “future plan”. Yet, businesses continuing to depend on spreadsheets, email threads and generic tools expose themselves to higher compliance risks, operating in the metaphorical “black box”.
Here are nine questions that Clausematch says can help you ascertain if your company might be operating in a “black box” fashion:
- Can you effectively monitor regulatory changes and swiftly disseminate updates to all relevant documents – policies, procedures, controls and others?
- Are you able to map document dependencies at a detailed level, thereby driving necessary modifications smoothly?
- Do you have robust procedures for hassle-free and timely document drafting, review, and approval?
- Are you always meeting document review deadlines?
- Are your document management processes intelligent and automated, designed to avoid human error?
- Can you record a complete audit trail of all alterations to your compliance documents?
- Can you promptly communicate new and updated policies and procedures to staff?
- Do your current systems enable you to collect attestations from employees to verify compliance?
- Can you demonstrate compliance and extract insights via reports on the documents’ lifecycle at a click of a button?
If you answered “yes” to these questions, you can confidently say your compliance documents are managed in a “white box” manner, thereby reducing your company’s vulnerability to non-compliance risks, Clausematch remarked.
Read the full post here.
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