In my previous post, I looked at new challenges for compliance officers at insurance carriers. The Accenture 2015 Compliance Risk Study highlights that compliance functions must develop new ways to understand their changing business model, detect emerging risks, and steer their organizations toward improved ethical conduct and stronger controls.
In our view, many insurers appear ill-equipped to detect and address new industry trends, and embrace emerging technologies that could better enable their programs. As compliance officers consider these changes in the environment, they should evaluate a number of emerging best practices to help address these challenges:
Be data and insight driven
Data regarding client transactions, employee conduct, and controls performance is now abundant, and can help compliance functions generate early warnings and predictive insights through analytics. That means advanced data insights can be applied to a wide range of compliance challenges. These include predictive analysis of employee compliance (such as gifts and entertainment or outside affiliations), business compliance (such as conflicts of interest or due diligence), and financial crime (including transaction monitoring and fraud).
Be a collaborator
The war for talent and the changing role of compliance pose non-traditional challenges in getting the right people with the right skills on board. This involves attracting and retaining talent with different skills, capabilities and backgrounds. The industry should also take steps to openly discuss these challenges, learning and evolving in a collaborative manner.
A very high number (85 percent) of insurance respondents say that sharing resources with other institutions for the delivery of certain compliance processes will be key to the long-term sustainability of compliance operations.
Be an ethical monitor
Nearly four out of five (79 percent) insurance respondents agree that compliance will be the pre-eminent group in the organization for ethical and cultural change. This recognizes that many compliance challenges cannot be overcome with controls and analytics alone, no matter how strong these capabilities are. It is as important to promote a stronger culture of ethical, self-correcting, and self-policing behaviors.
There is a range of new models to support cultural change and organizational learning. These can form an important part of compliance’s suite of capabilities. These models include “nudge” programs, “gamified” approaches to learning, and internal social networks, among many others.
Another aim of cultural change should be to support stronger collaboration across the three lines of defense, helping front-office risk, compliance, and audit functions to pull in the same direction. Without stronger links across these functions, compliance will find it difficult to deliver on its mandate.