You unlock this door with the key of imagination, beyond it is another dimension – you’re moving into a land of both shadow and substance of things and ideas – you’ve just crossed over into the Twilight Zone of DATA UNCERTAINTY.
A paper by KPMG about “harnessing data and analytics to transform compliance” talks about the parallel between technological advancement and the increasing demands on Chief Compliance Officers (CCOs) to “have certain data and analytics available at their fingertips” to meet regulatory requirements.
According to the paper’s authors, “the heightened demands for compliance D&A” is all about having “more robust, and predictive, D&A capabilities” to identify and manage risk on a proactive versus reactive basis.
KPMG highlights the following five key areas on which CCOs should focus their attention to get to said proactive state:
- Evaluating compliance program data needs.
- Assessing data quality.
- Sharing compliance data across the three lines of defense.
- Integrating and automating data analytics for greater compliance insights.
- Crafting predictive analytics that align with organizational need.
While all five are essential elements of a sound D&A compliance strategy, in this third installment in the Twilight Zone series, we will focus on why leveraging data and analytics to manage compliance and risk is more important (and more challenging) for CCO’s today than ever before.
We will also examine how, through data modernization (technology), CCO’s will acquire a robust data analytics capability and gain a “360-degree view” of how existing and emerging risks will impact their organization.
Compliance AND Risk
You can’t have compliance without risk management and vice versa.
Compliance provides the rules and regulations that protect organizations from risks. Risk management protects organizations by identifying risks that can lead to non-compliance.
The link between compliance and risk management is straightforward. However, an April 2021 article by Matt Kelly identifies how the nature of company risk has changed dramatically in a post-COVID-19 world and how it is now anything but straightforward.
A key driver of this change is how compliance officers and their teams are “scattered around the world, working at home or in remote offices.” As a result, there is a greater reliance on “systems, reports, and analysis.”
Unfortunately, what Kelly describes as the “slow evolution to a data analytics world,” he now sees as a “mad scramble, as even our basic assumptions about risk, policy and procedure have been tested like never before.”
For Kelly, this has changed the dynamics of the compliance -risk management equation. In short, because of COVID-19, there is a greater and more urgent need to focus on risk management versus what he calls a “slavish devotion to regulatory compliance.” In making the above assertion, Kelly isn’t suggesting that regulatory compliance is not important.
What he is saying is that due to the risks that COVID-19 creates for a modern enterprise, the “ability to analyze those risks in a disciplined, data-driven way could spell the difference between corporate survival or failure.”
Within the context of this new reality, achieving a “strong data analytics capability is suddenly crucial.”
How do you enable the achievement of this needed capability?
This past November, an Information Week article identified the Top 10 Data and Analytics Trends for 2022.
Not surprisingly, the impact of COVID-19 regarding data and analytics was center-stage.
Covering everything from smarter, faster, more responsible AI, and decision intelligence, to augmented data management, the article presents the emerging technologies that will drive data modernization initiatives at the organizational level.
As a result, and from a compliance and risk management standpoint, CCOs will be better able to analyze data through a single repository of data with clear taxonomies and accurate data tagging.
Besides providing in-depth reporting, data modernization technology will also ensure enterprise-wide continuity by embedding automated data collection capabilities into company policies and procedures. In other words, everyone across all business units will have access to the same information simultaneously in real-time.
At its core, compliance and risk management is dependent on having quality data available at your fingertips. Data modernization delivers that accessibility.