The Future Of Compliance Management
Playing by the rules in the financial sector is always necessary but rarely easy. Above all, professionals know that regulations are constantly updated to match the times and circumstances. Moreover, innovations in the financial sector will drive the future of compliance management. For example, it’s hard to imagine how regulators could apply 19th-century banking laws to cryptocurrency or even credit card transactions.
Compliance Trends
The industry needs an equal reaction in the regulatory landscape with every step forward. Therefore, keeping an eye on emerging legislation or industry practices is critical if you want your firm to stay ahead of them.
Looking at the state of compliance management, it’s clear that the only constant is change. But, on the other hand, recent changes to laws and world events, such as the COVID-19 pandemic, are causing the industry to react in ways that are sometimes predictable, sometimes surprising. But, of course, this is in addition to other changes that continue to have cascading effects throughout your organization.
Meanwhile, getting a handle on these trends is crucial if you want to help ensure you continue to comply with the rules even as the ground shifts under your feet. With that in mind, here are some of the biggest challenges you may face or expect to encounter again as your firm moves through this year.
Environment, Social and Governance (ESG) Disclosures
Environment, social and governance disclosures are becoming a much more prominent aspect of doing business today. Above all, that’s due primarily to investors who place a great deal of importance on a company’s performance beyond the bottom line. For example, these disclosures include items such as an organization’s greenhouse gas emissions, the diversity of its workforce, and any political contributions it has made.
A growing percentage of the investor base wants their portfolios to reflect their values and earn them a solid return. Reflecting values is why many companies have jumped at the opportunity to disclose these indicators to align with these investors. Currently, the SEC and other international bodies only require companies to disclose certain aspects. However, the fact that so many firms voluntarily share this information means it may behoove you to do the same if you don’t already.
Privacy Protection
Financial companies have unprecedented access to data about their customers and clients. Access to data gives them a tremendous wealth of information to make better decisions. But, most importantly, there is a substantial responsibility to utilize data with care and responsibility. Therefore, it should be no surprise that regulations have emerged to address this. However, these rules differ from territory to territory.
The European Union enacted the General Data Protection Regulation (GDPR) in 2018. GDPR requires businesses to be transparent about using the personal information they collect. Even in the United States, California recently took the lead with one of the strongest privacy laws to protect consumers. The California Consumer Privacy Act (CCPA) took effect in 2020. Other states have passed privacy regulations, too.
These pieces of legislation require companies that operate in these parts of the world to oversee consumer data with care. However, they also differ in crucial ways that can make it challenging to comply. For example, the CCPA covers a specific set of personal information, while the GDPR is broader in its definition of what is considered protected. K2 has courses on privacy and GDPR to assist with your efforts.
Requests for Data
As the pandemic rocked several industries worldwide, large numbers of employees found themselves furloughed or downsized as companies struggled to slash costs. One of the most unexpected side effects is the strain this has placed on many enterprises’ data infrastructures.
A significant spike in Data Subject Access Requests (DSARs) has been seen as many of those put out of work by COVID-19 seek to build a case for wrongful dismissal. The spike in DSARs can be a severe issue for organizations without the bandwidth to comply with the higher-than-expected volume of requests while complying with other regulations surrounding their data.
Summary
Compliance management is a tricky balancing act. The balancing act is made more difficult by constant changes in the landscape. Even if you believe your company has everything well in hand, it would be advisable to consider these issues. Ask yourself if the business is prepared to manage them. Innovations in the financial sector will drive the future of compliance management.
Many of the ideas in this article are contributed by Peter Braverman, Vice President of Sales for Donnelley Financial Solutions™, a financial software solutions company. He has 16 years of experience in the industry and focuses on selling SaaS solutions in the Capital Markets industry.
To learn more about cybersecurity, consider one of our K2 security courses. In addition, we have a variety of security courses at our K2 Technology Conferences. Sessions include Safeguarding Taxpayer Data – A Guide For Your Required Security Plan, Implementing Data Loss Prevention For Better Security And Privacy, and others. We have various ESG, DEI, CCPA, and GDPR issues covered in our various courses.
