Today, almost every financial institution is subject to a dizzying array of regulations and standards. This has resulted in an ongoing drive for greater transparency and operational integrity.
Managed service providers (MSPs) are uniquely positioned to help financial institutions implement risk and compliance programs. Not only can they assist with compliance management, they have strong cyber security policies and protocols to keep your business secure – a must in this digital world, particularly as financial services in Australia are at the highest risk of cyber-attacks.
MSPs can provide a range of services, such as security consulting, penetration testing, and vendor management.
Why is compliance management necessary?
Large corporations are increasingly being held accountable for their actions. Keeping track of all these regulations and standards can be challenging for any business. This can lead to delays in important business decisions, as well as costly penalties.
A lack of systematic tracking can lead to failure to meet regulatory requirements. To avoid fines or delays, it is essential that enterprises have a clear understanding of their regulatory and corporate responsibilities. This is traditionally done through a process called regulatory compliance management, a process that helps organisations control and manage the regulatory risks such as risk assessment, mitigation, monitoring, and crisis communications.
The importance of compliance in financial services
Financial services must comply with regulations and standards developed by regulators and industry groups. These regulations cover areas such as consumer protection, market integrity and liquidity, financial crime prevention, cybersecurity, data protection, and more.
To comply with these regulations, financial services companies must implement appropriate controls, such as policies and procedures, monitoring and evaluation, and training.
When an organisation does not comply with regulations, it can face costly fines, regulatory investigations, and even legal ramifications.
Role of MSPs in financial services compliance
When it comes to regulatory compliance, internal auditing may not be enough. Enterprises may need the assistance of a third party to complete their regulatory obligations. This is commonly known as outsourced, or managed, compliance.
An MSP can assist with establishing a compliance program, conducting internal audits, managing vendor risk programs, and more. Most MSPs have a broad range of capabilities, allowing them to assist with most compliance requirements.
Financial firms can use this standard to establish an effective and holistic information security management program. Internal audit and compliance professionals can leverage a wide range of specialised tools to help meet their requirements.
MSPs can help manage risk and compliance by:
- Providing greater understanding of your risk tolerance, mitigation risks, and regulation compliance.
- Identifying opportunities for improvement by providing analytics on your current performance.
- Providing you with an audit trail of all changes made to your systems and data, which helps to ensure compliance with regulations.
- Providing regulatory compliance training to your employees.
MSPs can also provide insight into the potential risks posed by specific business processes or technologies. For example, a fraud awareness program can help an MSP identify if employees are conducting personal business on their company computers.
These services can help organisations stay in compliance with regulations, and minimise risk and costs associated with regulatory investigations. An MSP can provide a comprehensive view of regulatory requirements across all of your business functions.
Benefits of partnering with an MSP for risk regulation
Risk management is a process that involves assessing threats and opportunities, and taking steps to minimise the impact of risks. It also includes developing strategies for dealing with risk, as well as identifying and mitigating vulnerabilities. Risk management is one of the most important aspects of regulatory compliance.
MSPs can help with risk analysis, controls and assessments, and vendor risk assessment and management. In addition to providing risk management services, an MSP can also help with mitigating the risks related to outsourced technology and operations.
When it comes to regulatory requirements, one size does not necessarily fit all. Regulatory frameworks are specific to each industry and risk profile.
For example, the rules and regulations for investment banking are different from those for retail banking. This makes it challenging for enterprises to keep track of their regulatory requirements on their own.
MSPs can help mitigate this problem by providing a comprehensive overview of regulatory requirements across an enterprise. A security consultant can conduct a security assessment to identify potential risks and vulnerabilities.
An MSP can also help with risk monitoring, which includes conducting periodic risk assessments to determine whether risks remain the same, or whether they need to be adjusted, as well as improving your overall security posture by conducting a penetration test.
Maintain compliance and regulate risks with a trusted MSP
Risk and compliance management are key elements of operating any financial services organisation. MSPs can help with risk analysis, controls and assessments, and vendor risk assessment and management. An effective compliance program enables companies to understand and mitigate the risks associated with their business model.