Nowadays many industries are incorporating regulatory and legal compliance into risk assessments. This concept is relatively new, but despite this, it is becoming prevalent in a large number of organizations because of the numerous advantages it offers. If this pace continues, here are some ways in which compliance risk assessment will probably change in the upcoming years.
The scope of this methodology will increase even more and will start supporting more regulatory requirements under the scrutiny of the government. These requirements are bound to grow in immense numbers, especially in businesses that belong to the financial and health-care industries. Any company that has limited resources will probably find it difficult to track legal and regulatory changes in requirements and then assess the impact of these modifications on the organization itself. Such a business would also have trouble updating their own registers. No matter what issues have to be faced, all these tasks will have to be accomplished, even though they do not directly result in increase in profits.
For all those companies who follow the checklist approach towards compliance risks will have to change their methodologies because this method will become ineffective. This is because with the passage of time, the standards which are used for measuring compliance will modify from a one – model – fits – all structure to tailored models that are largely based on risks. What this implies is that assessments which are based on checklists will not be useful enough and can even harm businesses because they do not analyze risks effectively.
Risk management will keep on developing as specialization, and companies will eagerly hire individuals who achiever this. Compliance risks will continue to occupy even greater portions in a company’s complete risk portfolio. As such, the need for individuals who have gained expertise in this will rise. True right now, risk management is not exactly recognized as a proper professional specialization, but as time changes, so will this in the long run.
Compliance risk assessment activities will gradually become a continuous and dynamic process. As of now, companies perform these assessments on a yearly basis. After this, the compliance register is often thrown off in the shelves, only to be taken out in the subsequent year. However, now lawmaking is becoming more prominent and is accelerating at a rapid pace. As such, companies will need to reassess their compliance risks on a regular basis.
Risk assessment will also start addressing third party risks so that they can be managed in a better way. Often, risk managers do not consider the regulatory and legal risks that are associated with vendors, suppliers, outsourced companies and the like. This approach often results in an error. Though in every business, all these outside agencies are an integral part, you cannot be sure if they will comply with the legal polices or not. As such until everyone follows the same methodologies, proper management cannot be achieved.