According to a recent Wall Street Journal survey of compliance professionals, organizations are facing new and amplified compliance risks, while the coronavirus pandemic has made many compliance programs far less effective.
Survey data shows that 90% of companies have experienced new risks or that existing risks have been exacerbated by the pandemic. Close to half of respondents reported both. One in four said compliance programs have taken a hit during the pandemic. As a result of these challenges, compliance and risk staff are forced to rethink their internal safeguards.
Investigations and risk assessments have become almost fully remote as a result of the pandemic, and many companies are looking to technology to make their compliance programs more efficient in the long term. More than 75% of survey respondents said they now rely more on data and advanced tools to manage risk and compliance.
With ‘work-from-home’ protocols expected to continue for some time, there is immediate risk that these compliance and risk management challenges will equate to bad outcomes which may harm consumers and result in further punitive enforcement actions against firms on the part of bank supervisors.
These trends highlight the opportunity being seized by ‘regtech’ firms, and it is notable that most major bank regulators have stood up ‘innovation labs’ to help promote the trialing of new risk governance methodologies.