Every day we're bombarded with events that impact the risk and compliance landscape. Fraud, customer dissatisfaction, and data breaches are common points of concern. It’s important then for organisations to adapt to these new risks and put in place an effective response strategy - a premortem.
These areas offer new opportunities and new challenges for risk and compliance. So, what does the market say that we should prepare for?
Using cognitive technologies in the decision-making process goes beyond the traditional way of mitigating risk, but it benefits the overall process. Combining intuition with autonomous processes such as high-performance computing allows you to detect and prevent risks in high-risk situations. In some cases, it also allows you to predict possible areas for concern before they become a problem.
Once the baseline risk and compliance governance rules are in place, the cognitive model can “learn” and become self-managing. It also has the potential for self-defending and self-healing against any compliance risks over time.
How these technologies could be implemented:
The rise in the use of wearables, and smart devices coupled with the advancement in streaming analytics brings about more data collection points. This could also enable more risk and compliance monitoring and enforcement points.
With the correct use cases defined, we can use these tools to detect risk and compliance-linked events. We could also derive risk and compliance insights to take immediate action. The key outcome is then a pervasive and dynamic risk and compliance management function.
How you can utilise these tools:
Risk and Compliance business processes are never fool proof. Tactical adjustment to these processes (based on incidents or risks identified) only yields marginal benefit. In some cases, the delayed time investment is better served in the innovation space.
Organisational focus is shifting toward being more vigilant by detecting patterns or similar conditions, which may hint at a possible risk and compliance event. The importance of these activities will rise in prominence going forward to allow businesses to operate on the front foot. Monitoring emerging risk and compliance at a possible threat level gives businesses the space to be proactive.
The potential to identify and enhance “blind spots” in business processes becomes pertinent to mitigate potential disasters, especially when managing outages and breaches from third-party vendors.
Tactical adjustments you can make today:
As a practical example – the COVID-19 pandemic's effect on business operations and bottom-line results brought about a broader usage of risk instruments. The importance of these safety tools is to prepare for any future “mega-impact” risk events. They also assist in dealing with the fallout of events such as cybercrime, terrorism, and political instability or unrest.
In the past, hedging against such risks was irregular. Yet, it may soon be normal to introduce third-party insurance or risk-sharing and in-house insurance. Innovation within the Financial Services Industry has improved with ongoing pilots that introduce some of these foundational financial instruments to offset risk where possible.
How you can hedge your risks today:
It is becoming more difficult for regulations to keep up as the pace of innovation quickens across diverse industry sectors. Many businesses and organisations are taking on high-risk innovations as a strategy and reaping the rewards. Increasingly, the rapid pace of innovation is driving the regulatory agenda.
Dealing with regulations:
As these “futuristic” elements become commonplace within the corporate space, and compliance and risk events become more measurable and tangible, organisations will be enabled to determine an accurate and informed risk and compliance stance. This will encourage the appropriate level of risk-taking and monetisation that is necessary for future development and processes.
Find out how Ozow stays ahead when it comes to risk and compliance here.