How to Manage Risk and Compliance: Expert Tips

December 18, 2023
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Risk and compliance are at the top of mind for businesses as compliance risk breaches and hiccups continue to make headlines. Along with operational risk, financial risk, credit risk, and market risk; compliance risk can be properly managed with the right care and solutions in place. 

We’re going to review what risk and compliance management look like in practice and see how automation solutions will work in your favor.

Coming Up

What is Compliance Risk?

What is APRAs Approach to Compliance Risk?

What are the Types of Compliance Risk?

What is Compliance Risk Management?

What are Compliance Risk Examples?

How to Improve Risk and Compliance with Automation?

Closing Thoughts

What is Compliance Risk?

In the world of business, rules and laws exist. Compliance means that you stay in line with such laws and regulations. Compliance risk is the probability or likelihood of failing to act within internal or external legislature. 

Compliance obligations are dictated by the industry in which a business operates within. For financial services, there are robust obligations along with ever changing laws and standards. The goals of these standards, laws, and rules are to protect people and sensitive data. 

The failure to adhere can result in fines, lawsuits, reputational damage, and even criminal prosecution. That’s why businesses invest in mitigating compliance risk as much as possible. 

Automation solutions can help because they make it possible to standardize key finance functions, protect data with up-to-date bank-grade security, and help companies meet critical deadlines with enhanced data accuracy. 

What is APRA's Approach to Compliance Risk?

For businesses in Australia, the Australian Prudential Regulation Authority (APRA) regulates the financial services industry. APRA’s interest is focused on an entity’s ability to monitor compliance, consider APRA’s guidance, and uphold prudential standards. 

If it so happens that there’s a compliance breach, APRA’s goal is to help understand why and where something went wrong and review the company’s people, processes, and systems to prevent it from happening again. 

In order to position the entity for compliance risk success, APRA reviews the organization’s way of working and its suitability of its risk management framework in order to be able to properly manage risk. 

In their words, APRA wants entities to focus on having:

  • Established processes to support compliance risk management 
  • Maintain clear accountability to manage compliance risk
  • Have a clearly defined approach for compliance risk management 

APRA reporting can be time-consuming and overwhelming, but it is necessary, of course. Automation software can help to streamline APRA reporting by gathering, checking, approving, and submitting data directly to regulators through integration with Vizor Software’s Reporting API. 

What are the Types of Compliance Risk?

While it seems like you can’t control every type of compliance risk, you can certainly take initiative to minimize compliance risk with the right tools, processes, and people in place. 

Here are a few of the most common types of compliance risk that may occur:

1. Unsafe Storage

Data must be securely stored to avoid breaches and hacks. Failure to do so can result in many detrimental outcomes, for businesses and customers alike. 

2. Lack of Monitoring

Compliance regulations typically involve data monitoring. Data monitoring positions people in place to receive alerts of active or impending threats to the company’s data. 

With this foresight and quick recognition of a breach, businesses can lessen the impact of a hack and/or the related fines. Bank-grade security in the cloud keeps your data and information safe.  

3. Human Mistakes

Regardless of how dedicated or focused your team may be, human error is inevitable. But, even small mistakes can lead to big negative results. This is another place in which automation software can dramatically assist. 

With finance automation solutions, you can automate critical business and finance processes, thereby immediately reducing the chance of mistakes by 90% or more. 

Along with these benefits, you also remove key person dependencies and gain access to audit trails, so you never have to worry what is or isn’t done because the system will manage everything. 

4. Misconfigurations

Setting up systems properly is paramount because even a simple misconfiguration can put your data at risk. That’s why it’s important to test configurations across the entire environment before deploying into production. 

With automation software, the setup is maintained on your behalf, and when you are ready to deploy process automation, you can even choose from pre-built templates that have been designed purposefully. 

A drag-and-drop interface removes the need for IT involvement and provides low-code configuration with little to no learning curve required.

What is Compliance Risk Management?

Compliance risk management is a business’ approach and processes put in place in order to identify, assess, and mitigate compliance risk. 

Regulations and laws constantly change and get updated, so compliance risk management is a continuous practice. 

It also requires that everyone within an organization be aware of what standards, practices, and processes are in place so that everyone is working towards lessening risk and adhering to regulations. 

The flow of compliance risk management is as follows:

1. Define Approach

It’s a good place to begin by defining how your organization will approach compliance risk. This could be with the involvement of software solutions, as well as by putting the right people in place to manage compliance risk. 

2. Establish Processes

With the approach in mind, it’s time to set up processes that follow suit. Maintaining a clear view of how processes within your organization run is a critical piece of the puzzle. With adequate internal control comes proper management and the ability to fix mistakes quickly. 

Many organizations find it useful to clearly document their end-to-end processes so they can identify where gaps may reside. Then, they work towards filling those gaps to lower compliance risk. 

At this point, it’s highly beneficial to include process automation and software solutions that can run processes in a standardized manner and add an extra level of internal control and transparency. By doing so, you’ll gain audit trails with protected version history. 

3. Clear Accountability

Accountability is also a main concern when it comes to compliance risk. 

There are many layers of accountability involved when it comes to compliance risk, including:

  • the business to account for and manage the risk in the first place
  • risk management to maintain oversight, 
  • internal auditors to provide an independent assessment of the prior two lines. 

What are Compliance Risk Examples?

If you’re reading this, you’re probably aware of the compliance risk you’re facing in your business, but you may be unaware of compliance risk that you haven’t even thought of. 

Here are a few examples of compliance risk:

1. Customer Due Diligence

It’s up to your business to ensure that a customer is who they say they are. Proof of identification is the easiest way to do so, but in some cases, it requires more research and checks, especially when it comes to financial organizations and services. 

2. Software Updates

Software updates are necessary to maintain top-notch security. Outdated software can be the cause of vulnerabilities.

An upside about using cloud-based automation software is that you no longer have to think twice about data security and updates. They take place automatically, so your software will always operate with the latest and greatest security measures. 

How to Improve Risk and Compliance with Automation?

Along with the measures and people you put in place to upkeep risk and compliance management, automation solutions can do much of the heavy lifting for you. 

With automation software, you gain peace of mind in knowing that your data is securely stored, managed, and utilized. You can directly work alongside auditors and regulators, without having to spend too much time sourcing and formatting data and reports. 

You gain enhanced data quality, a unified platform to work with, and a way to maintain adequate internal control and oversight. 

Additionally, automation software enables standardized processes that are thoughtfully designed and set up to adhere to regulations. With remote teams, this is more important than ever to be able to keep everyone on the same page, literally and figuratively. 

Closing Thoughts

Risk and compliance come as a package deal. The good news is that businesses have the power in their hands to minimize their compliance risk categories by being proactive. 

Automation software empowers organizations to protect their data according to the most recent security measures, automate and standardize processes, and run audit reports in a moment’s notice when needed.


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