We are already done with Q1 of the fiscal year and many financial institutions aren't prepared for the emerging areas of risk. Regardless of the industry that you and/or your organization operate in, it is important to understand and prepare for industry trends in order to become more adaptable. Failing to do so will result in unnecessary fines, losses, and bankruptcy, especially when dealing with the regulatory compliance environment. Earlier this month, The National Law Review ranked the top 10 issues facings financial institutions in 2017 and most interestingly, compliance related matters are listed twice.
The seventh biggest issue financial firms will face this year is corporate governance and the culture of compliance. View their reasoning below.
“A less prescriptive, but still challenging, area of compliance for financial institutions is governance and culture. Much has been discussed in the last year about corporate governance considerations and an institution’s culture of compliance, not only in light of enforcement actions on incentive compensation and sales practices, but also in light of specific guidance on establishing a culture of compliance. These considerations begin with the board of directors and senior management and trickle down through the institution. Tone at the top, communication, and incentives are key to navigating the labyrinth of aspirational guidance from federal and state regulators.
— Joseph E. Silvia
The biggest takeaway from that quote is that once an organization realizes the importance of compliance, senior management and leaders should set the tone early. Mix this in with clear communication and incentives to employees and that organization's culture will change dramatically.
What could be more expensive than corporate governance and the culture of compliance? The National Law Review ranks securities compliance as the number one biggest issue facing financial institutions in 2017, especially for publicly traded and privately held banks. View their reasoning below.
“Now is the time of year when publicly traded institutions are preparing for their annual meetings and finalizing the related SEC filings. 2017 brings some new requirements for publicly traded institutions, while other requirements that publicly traded institutions used to focus on are back in the spotlight. Although privately held institutions are not impacted by most of these requirements, securities law matters should nevertheless be a focus for privately held institutions. Whether trying to raise capital or to refinance existing TARP, SBLF, or debt, various securities law requirements need to be complied with by privately held institutions.
— Joseph E. Silvia
Publicly traded companies need to be aware of the new requirements the SEC put into place while refreshing themselves on the requirements that were brought back. Although these requirements only affect publicly traded companies, private companies need to educate themselves on these regulations as well to stay on top of the industry.
Although the list that The National Law Review has given is specific to financial institutions, there is no doubt that compliance is a global concern. We constantly hear of companies being audited by government entities because their compliance policies were either inefficient or led to a breach. Can your company afford an audit?