Using risk, compliance and regulatory data to strengthen organisational resilience

01 July 2015

By Dennis Chesley

New regulation stemming from the financial crisis has cost the six largest US banks $70.2 billion as of the end of 2013.* That’s a tough pill to swallow. But just imagine how much easier it would be to handle if the cost could also be considered an investment. What if the information generated by risk, regulatory, and compliance activities at financial institutions could help them achieve their business objectives and gain a competitive edge?

This is the proposition suggested by PwC US’s Financial Services team in a recent report called “The extra mile: Risk, regulatory, and compliance data drive business value.” The report highlights a five-step approach, some cases, as well as the challenges for the risk, regulatory and compliance functions in deriving more value from the data they gather.

We are excited by these findings, and believe that the approach recommended by the Financial Services team bolsters our own long-held perspective about organisational resilience, particularly within financial institutions.

We define resilience as an organisation’s capacity to anticipate and react to change, not only to survive, but also to evolve. Change is a key word when it comes to resilience in the financial sector. In the coming years, financial institutions will have to manage through tectonic shifts in the behaviour of their customers (both consumers and institutions) to remain relevant. They will need to get smarter at using data to see the signals, anticipate those shifts and re-orient the organisation to continue delighting customers and thrive. In other words, financial institutions will need to use the data gathered from risk, regulatory and compliance functions in a holistic way to bolster their resilience.

The report gives an example of how the adverse media scans performed as part of anti-money-laundering requirements can help institutions better understand institutional reputations, consumer attitudes, and potential risks to the business. With this insight, they can develop new ways to engage with other parties to better understand their brand health and those of their business partners and competitors. They would be on their way to customer centricity.

Could it be that, as a result of risk, regulatory and compliance activities, financial institutions already possess much of the data they need to strengthen their long-term resilience?

Read the report and tell us what you think.

* Federal Financial Analytics, "The Regulatory Price-Tag: Cost Implications of Post-Crisis Regulatory Reform," July 2014.

 Dennis-chesley

 

Dennis Chesley |  Global Risk Consulting Leader
Profile |  Email  |  + 1 (202) 316 5089

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