Regulatory Compliance Risk Officers Should be Aware of in 2022

As we continue to cope with year three of the COVID-19 pandemic, risk and compliance officers will continue to play vital roles in preparing their firms for threatening situations. Businesses are pivoting to support organizational resilience while officers are providing vigilant responses that extend beyond the traditional purview of regulatory compliance. Specifically, risk and compliance officers will need to examine the impact of the digital transformation on vulnerable consumers, the challenges of a hybrid working environment, the continuation of cyber resilience, and the development of strong due diligence strategies.

To ensure that your compliance officers are adhering to 2022 regulatory compliance trends, EVS has compiled the four key vulnerabilities that compliance officers need to prioritize when preparing for all eventualities to minimize financial risk.

Digital Transformation

As digital transformation technology evolves at a breakneck pace, keeping up with these changes will allow your business to remain relevant and competitive. Moving through 2022, risk and compliance officers need to focus on the fair treatment of vulnerable consumers and how they are susceptible to being left behind by technological developments. This includes establishing methods of identifying vulnerable consumers, developing vulnerable consumer policies and procedures, and training company staff to implement and adhere to these procedures.

Examining digital transformation also includes scrutinizing the impact of cryptocurrencies. While cryptocurrency may be the innovative future of banking or a criminal vehicle for financial fraud, the explosive development of the crypto market is resulting in accelerated regulations. Compliance officers must now address how mainstream cryptocurrency such as Bitcoin has altered risk profiles and increased concern for potential crypto financial risks and money laundering.

Hybrid Working

The ongoing pandemic has challenged businesses to adopt hybrid work environments, and this hybrid model is likely here to stay. Beyond traditional hybrid challenges, hybrid work environments will present a challenge in establishing and regulating company culture and values. While some regulations are clearly defined, most culture and conduct expectations are not legally established, leaving many companies to work within ineffective frameworks based on internal principles. Regulatory compliance officers need to make sure that the hybrid model will not compromise the firm’s ability to follow all rules and regulatory standards and obligations.

Cyber Resilience

Cyberattacks are one of the greatest economic threats facing modern businesses. Because cyber security risks have increased specifically within the financial sector during the pandemic, creating and implementing a cyber resilience strategy will allow firms to avoid catastrophic failures, decrease the possibility of a successful attack, and minimize any damage should an attack occur. Compliance officers must consider an integrated approach to cyber resilience to allow businesses to safely and securely introduce new technology while lowering long-term risk profiles.

Recent cyberattacks have spotlighted insider threats as a growing source of risk. While attacks from criminal syndicates are still concerning, threats from contractors and employees who access and manipulate important company data for their own financial gain are becoming more widespread. With the Covid-19 pandemic resulting in more remote employees than ever before, the need to authenticate employee information and minimize risks of internal fraud are increasing. Risk and compliance officers need to consider that cyber resiliency is firmly embedded throughout their companies by advising on breach notification requirements and remediations. Officers should also set cyber resilience goals to anticipate and recover from disruptions, withstand attacks on key systems, and adapt to address potential threats.

Due Diligence

New US federal risk and compliance regulations from the Department of Justice and the Securities and Exchange Commission are putting corporate behavior under the microscope. This scrutiny is pushing firms to adjust their risk management strategies around ESG, diversity, and sustainability. Shallow corporate responsibility commitments with little change to policy, products, or packaging is no longer tolerated, and developing a strong due diligence strategy is necessary to stay current with consumer expectations, investors, and regulations.

Global regulations require compliance officers to test and monitor compliance efforts as well as test the integrity of ESG reporting. Compliance officers must establish functional financial ESG programs that clearly illustrate corporate due diligence and provide improved transparency and proof of progress. This due diligence can be streamlined by taking advantage of modern technologies such as AI and machine learning or natural language processing. These advancements can not only accelerate the due diligence process, but it can transform corporations into more competitive, productive entities.

Are you interested in bolstering the resilience of your organization’s regulatory compliance systems? Implementing EVS solutions can strengthen your company’s compliance efforts, identify possible fraud, and protect your business.

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