Boston — In addition to being a calamity, the recent travails of the financial services industry have also been a catalyst. A new report from Boston-based Aberdeen Group Inc. “Continuously Compliant: Ensuring Proactive, Comprehensive Compliance” contends a greater investment in GRC tools is a necessity given the expected push toward closer regulation of all financial services industries, including insurance.
“In the wake of the sub-prime mortgage crisis and subsequent (and seemingly overnight) collapse of formerly billion-dollar blue-chip companies significantly increased attention has been placed on the current regulatory landscape,” the report, authored by Aberdeen’s Stephen Walker II, states. “Tighter regulation has been demanded by top political activists and officials from parties of all stripes.”
Irrespective of the current crisis, Walker says the recent growth of intricate regulatory requirements has illuminated an urgent need to replace inadequate processes and invest in technologies and services that “facilitate effective, holistically-derived, and business-advancing compliance activities.”
Yet, achieving this holistic view is no mean feat in the historically siloed insurance industry. “One of the biggest hurdles facing organizations (especially those competing in multi-regulatory environments) involves documentation and reporting,” the report states. “Errors stemming from inaccurate, incomplete, or conflicting information from multiple sources is an even bigger concern if the company has an expansive footprint with multiple, disparate operations.”
The report says that effective GRC solution is less a tool than a set of them including authentication tools, identity and access management tools, network access controls and application analysis tools. The report also stresses the need to establish capabilities including a clear hierarchical accountability for compliance activities to achieve established objectives and goals, and also to identify an executive responsible with primary ownership of compliance program.
Walker says that a sufficiently advanced company will also invest heavily in automating these functions. “One of the primary vehicles used to drive operational improvement strategies is the automation and streamlining of compliance functions,” he says.
According to the report, these investments will ultimately pay dividends. The company says best-in-class respondents averaged a 15% increase in accuracy of compliance related information, a 13% increase in ability to detect weaknesses in compliance controls and procedures and a12% decrease in number of actual compliance incidents and breaches.
Source: Aberdeen Group
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