Financial Institutions Facing Growing Regulatory Concerns

  • March 27, 2019
  • Quantivate

Given recent headlines about regulators cracking down on insufficient risk management programs, many banks and other financial institutions are taking a closer look at their own risk and compliance management practices.

A recently released regulatory survey from The Risk Management Association, a non-profit professional group, revealed some of the biggest challenges banks are facing in managing risk. The survey focused on six categories, including enterprise risk management, compliance, and the regulatory environment, among others.

Let’s take a look at some of the key findings.

Top 3 Risk Management Challenges

The institutions surveyed ranked the risk areas they found most difficult to manage as:

  1. Operational risk (which encompasses both cyber risk and third-party risk)
  2. Regulatory compliance
  3. Credit risk

These risk categories align with some of the primary program components that regulatory agencies examine. In the recent case of the Office of the Comptroller of the Currency (OCC) ordering USAA Bank to correct unsound banking practices, the OCC found a number of gaps in the bank’s risk management efforts, including:

  • Failure to implement and maintain an effective, bank-wide risk management program commensurate with the bank’s size, complexity, and risk profile
  • Failure to implement and maintain an effective, comprehensive IT program
  • Failure to implement and maintain an effective compliance management system that includes processes and practices designed to manage consumer compliance risk

The fact that institutions struggle with the risk categories that fall under regulatory scrutiny indicates a pressing need to align organizational risk management practices with compliance requirements.

Increasing Regulatory Demands & Costs

More than half of all respondents reported increased spending on regulatory compliance in 2018. Approximately a third felt that regulatory demands had a negative impact on product flexibility and the capacity to meet consumer requests.

Regulatory burden also proved a major concern at the management level. Bank directors cited their top challenge as “keeping up with the ever-changing regulatory environment.”

The Takeaway

Financial institutions need a comprehensive system for risk and compliance management to effectively monitor and manage risk and keep up with the pace of regulatory change.

How Quantivate Can Help

For more than a decade, Quantivate has been partnering with financial institutions to help them develop an effective framework for governance, risk, and compliance (GRC). Our range of software and services helps organizations reduce risk, boost performance, and drive smarter decision-making.

The products in the Quantivate GRC Software Suite can be used alone or together and include:


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