Tackling risk‐based compliance

Abstract

PurposeThis paper seeks to recommend a way for the compliance function to identify, monitor, and report the risks it faces to the firm's management.Design/methodology/approachOutlines the principal challenges in setting up a risk reporting system and recommends a three‐phase approach for implementing such a system.FindingsDeveloping a risk reporting system presents three challenges: designing a reporting system driven in real time by compliance work with a varied data set, organizing the information and processes of the compliance function so they can be automated, and arranging the presentation of risk to reflect complex organizational structures. The three phases for implementing such a system are gaining management sponsorship, looking for pilot projects to score quick victories, and rolling out the program.Originality/valueAn overview of compliance risk reporting systems that stresses the importance of collecting the right data in an automated fashion.