Gitan Shah, Business Leader and Sales Professiona-GRC, Mphasis

Evolving Geo-Political scene, financial hardships and shifting technology landscape has kept the regulatory bodies very busy.  Regulations are getting tougher and enhanced to cover all aspects of business. Amplified regulatory scrutiny has kept the large business on toes to safe guard their reputation to avoid any slippages and the ones that take risk are ending up coughing up penalties.

Quest for Opportunity – Growth – Profits is driver for financial organizations to look up; Governance – Risks – Compliance (GRC) has become the underlying force that can pull it down if ignored. Last year we have seen several cases of large global banks having a loosely held trinity of GRCand paying the consequence of this disconnect.

Need of the hour is Empowered Management to oversee an Agile GRC model that gives a real time view of the organizational risks, ability to track compliance and trigger remedial actions.

For this to happen we need to have systems that tracks and reads regulations, interpret them by business, jurisdiction and technology. This will lead to Real time risk assessment systems that will be periodically analyzing the business processes and try and be in sync.

To address such a dynamic system, organizations will need to automate their compliance systems such that every identified risk is quickly analyzed and required steps are integrated in the process to close the gaps. Another parallel system is equipped with AI to learn from the current compliance levels and the data from this system feeds further to build model for next implementation. The entire cycle of monitoring, reporting, controls and remedial actions will have to be automated backed by a predictive self-learning system.

While such a tightly integrated GRC platform sounds futuristic it would be unfair to think of it as impossible. We have stepped into an era of Autobots taking over processes reducing human error, AI systems taking up the human learning and analysis drastically improving the response times and decision making. This will give organizations lots of breathing room and focus on their opportunity-growth-profits.

One such disruptive force unfolding on GRC is Block chain technology. Take for example in the AML compliance world, Block chain’s distributed ledger system makes it impossible to modify transaction trails thus the transparency and traceability simplifies the entire need to bring in complicated Monitoring and Reporting tools. Blockchain technology can also help in real time maintaining of registered legitimate KYC details if the users share their digital identities securely.

• Enable link their investments globally incentivizing them by reducing tax burden

• Reduce Fraud

• Provide protection against identify theft

• Reduce duplication and inefficiencies

Imagine when an Iris scan will enable to withdraw money from ATM or make deposit into your friend’s phone by just looking into the device to authenticate a transaction. SMAC & IoT is blurring the lines between customers Personal profiles, financial accounts & Health profiles and soon one single Digital profiles will be used by all organizations. These technologies are also blurring the lines between the Banks, mobile companies and ecommerce platforms. Regulations will now need to cover a very wide application and has to be inclusive of every possible technology.

Another example is the regulatory havoc these self-driven car projects and delivery drones are causing. Such start-ups are fast lapping up monies and knocking on governments to approve their business ideas. In these cases there is regulatory compliance to be met for local laws and jurisdiction for road and air traffic safety, Insurance companies to cover the users as well as the business for any possible risk of litigations, financial institutions and companies that are investors thus liable owners who could be dragged to the court, IP and related technology compliance against infringement etc. It will be only so much time that these can be held as there is very little ethical grounds not to allow such technologies. (Unlike stem cell research or human organ cloning projects).

With AI tools and processing powers available to back will the trades become more predictive for given scenarios? What will be commodities and hedge fund markets look like with investors armed with their own super computers?  Such disruptions will be quick and many in the near future as technology is going to knock down many more traditional financial business models. 

This will also lead to scope for fraud, mismanagement, missed commitments or compromises on the organizations part or by their employees. Same technology and powers will be available to the ones that subscribe to negative motives. That will push new regulations and thus new models for GRC to evolve.

Organizations & Governing bodies have a huge task cut out to ensure that systems don’t get compromised and continuously upgrade the regulatory guidelines to avoid embarrassing situations. Technology has been a huge savior and can play a vital role to help combat. It is now for the CXO’s to make the call on how well they want to be invested in GRC and apply their organizations innovative thinking to reap more tangible value from GRC.