Risk and Compliance – An Evolving Landscape

Risk and Compliance – An Evolving Landscape

2020 has been a bizarre year on many fronts and has forced many companies to drastically rethink the way they operate, and how they work. While the ongoing pandemic has placed enormous pressure on specific industries, the underlying strength of our financial services sector has remained strong, and confidence in the hiring marketplace is becoming increasingly buoyant as we head into 2021, and as news of potential Covid-19 vaccines emerges.

As has been well documented, the role that risk and compliance functions have to play within financial services institutions has grown exponentially since the financial crisis in 2008. A changing regulatory landscape has meant greater pressure on compliance teams and increased profile within the internal structure of businesses. Moreover, increased focus on the ethical nature of organisations has also ramped up the need for strong resourcing of risk and compliance teams. The necessary nature of the specialism has provided a welcome safeguard in uncertain times.

Recent comments from the Central Bank have highlighted the need for financial services firms to adequately resource their respective compliance functions, and ensure proper training for relevant staff, most especially risk and compliance professionals.[i]

The growth of fund services activity following the Brexit vote in 2016 led to Central Bank changes around how funds are regulated in Ireland, requiring funds looking to establish operations in Dublin to have adequate resources allocated to their Irish operation, thus removing the option for London based firms to operate a “brass plate” presence in Ireland. [ii] More recently, the Central Bank has again moved to address the resourcing of existing funds providers in Ireland and highlighted that a “significant number” of firms already operational in Ireland pre-Brexit did not have adequate numbers of suitably qualified or senior personnel. In particular, the Central Bank emphasized that failure to invest in resourcing had led to key compliance roles being vacant for “prolonged periods”, resulting in “gaps in best execution second line capabilities”.[iii]

Looking to the future, it is becoming increasingly apparent that technology will have a significant role to play in the management of risk and be instrumental in streamlining and intensifying the level of automation in the sector. Rising regulatory requirements in the wake of the financial crisis necessitated a new way of thinking around ensuring effective compliance could be delivered in a cost-effective manner. The introduction of process automation, along with rapid advances in artificial intelligence and data analytics, can be a key driver of efficiency.

Thus far, emerging technologies have proved exceptionally advantageous in collating regulatory data, and scanning documentation, with more recent developments in the space focusing on improving the ability of document scanning system with more intelligent language technology, to help financial services firms manage their response to regulations in different jurisdictions.[iv]

While technology looks set to subsume the need for human involvement with more mundane tasks like data processing, the mounting pressure from regulatory bodies and from the public at large is strong, tangible evidence that the growth in the compliance and risk space looks set to continue in 2021.

Throughout 2020, Engage People has taken full advantage of technology to significantly grow our service offering, and in so doing be best placed to assist our clients. This has included the roll-out of a full suite of secure and personalised video interviewing technology, psychometric testing, and bespoke employer value propositions.[v]

If you’d like to hear more about the way Engage People responded to Covid-19 and continue to align business with talent get in touch with the team today.

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