What is Risk and Compliance?

Risk and compliance systems and techniques are what corporations use to survive in global business environments that are becoming more complex, regulated and focused on accountability and corporate social responsibility. Many risk management and legal compliance departments are run separately, so they may be uncoordinated, non-interdependent and non-communicative with each other. Thus, many corporations now focus on harmonizing and centralizing these importance control, monitoring and enforcement programs together.

A Brief Overview

Risk and compliance processes usually include three elements. Risk management empowers an organization to evaluate all relevant business, financial, operational and regulatory vulnerabilities in order to establish controls and monitor actions in an enterprise-wide manner. Compliance programs ensure that the organization has the systems and internal controls required to meet legal obligations imposed by governmental bodies, regulatory bodies, industry organizations and internal policies. A third element, governance, is defined as the oversight process that companies use to manage and mitigate business risks

Certain industries, such as banking, insurance and investments, have experienced a rapid increase in scrutiny from executive teams, regulatory bodies and corporate boards. This is compounded by new federal regulations, increased media coverage of scandals and consumer activism among shareholders. Governance includes things like regular communications about key policies, corporate control, regulatory management, ethical training and enterprise oversight. Governance activities help executives evaluate operational performance through risk and compliance scorecards.

An In-depth Overview

Risk management is a hot topic in corporations that want to rapidly sensitize employees to ongoing risks, legal obligations and ethical expectations, according to Investopedia. Risks can refer to IT, PR, HR, brand, reputation and financial risks. Business leaders understand that these collective risks are no longer considered the sole responsibility of individual specialists. Instead, corporate boards and executives can increase risk visibility and exposure through collaborative oversight of long-term goals and strategies. Risk management allows executives to systemically identify, prioritize, measure and respond to all forms of risk in their market and industry.

Comprehensive compliance management processes provide strategic scopes and visions for companies of all sizes and geographies. Compliance programs usually start as a small project to ensure compliance with certain regulations or business standards. The collective experience of attempting to ensure complete compliance with laws and policies ensures that business leaders understand the true deadlines, challenges and ongoing resource issues. As a result, business leaders can craft a customized compliance program that can sustain and exceed adherence with target rules.
Organizations that deal with multiple regulations at the same time can create an accelerated process of implementing new compliance initiatives.

Career Profile – Risk and Compliance Analyst

A risk and compliance analyst is responsible for monitoring and reporting on components of varying programs. They may focus on accounting internal controls, or they may just work with IT compliance. If so, they will analyze IT compliance program elements in order to determine adherence with policies and procedures. They may recommend corrective actions, prepare findings and assist with remediation strategies. Their work may involve scenario planning, risk analysis, customer interviews, audit testing and anonymous reports. They prepare reports to management to communicate results and recommendations for improving information system practices, controls and standards. IT compliance analysts tend to work in finance and health care organizations.

Related Resource: Become a Finance Director

A risk and compliance manager is a senior position for business experts who do everything from compliance reviews to job retraining to on-site observations.