Growing awareness of the usefulness and power of automation is leading to a sea-change in how organisations carry out their compliance and risk management. This has significant implications for those working in the sector, with growing numbers of staff being replaced by computers and related technology. But there are also increasing opportunities for those with relevant skill-sets who can take advantage. 

Off-the shelf or tailor-made technology products can now not just carry out mundane tasks such as preparing routine documents, but can actively search for changes in regulatory frameworks and update workers, databases and systems as required. Meanwhile evolving business models and external environments are continuing to push organisations to look into adopting automation technology to enhance risk management and compliance. And the huge time and cost savings that can be made by automation makes it extremely attractive to businesses involved in the field.   

Over the past few years Hong Kong has seen significant movement in allowing adoption of this “Regtech”. According to a survey by the Hong Kong Monetary Authority, about a third of banks it contacted have completely implemented at least one kind of Regtech solution.  

There are many benefits to adopting automation. These include:  

  • Transparency: The creation of a management information database which ensures that the whole organisation can see risk areas and change plans or mitigate as required. 
  • Efficiency: Mundane, routine tasks that would otherwise have occupied risk and compliance workers for hours can now be done in a few minutes. This also frees staff up for more important tasks, making better use of their time.
  • Cost: Automation can greatly reduce the amount of money spent in risk and compliance work.
  • Improved reporting and consistency: The same piece of software is doing the job every hour, every week. This is very different from a group (or groups) of disparate individuals who may not even be in-house, and who may have to deal with different styles and requirements.
  • Accuracy: Computers generally make fewer mistakes than people.

Risk management and compliance professionals may feel somewhat threatened by this move towards automation, and indeed there are reports of firms and companies reducing headcounts by 15 percent to as much as 50 percent over the past five years. However the increasing use of technology is creating more opportunities for risk and compliance professionals with backgrounds in programming, modelling and automation. There will also be more opportunities for candidates with strong maths skills. And workers with an understanding of what the technology can and cannot do are at an advantage, as they will be able to put their specialised skills to better use, and be more highly prized by employers.  Furthermore, the increased ability and efficiency of artificial intelligence systems and data-mining programmes means they are only going to be used by more and more firms and businesses. 

And Regtech isn’t limited for use just by large firms and organisations. Regulation and compliance management software can still help the many smaller businesses that rely on external counsel to interpret their regulatory compliance requirements. Many such requirements come in long lists, written in technical legal language that makes it difficult to understand. Regtech software can highlight and define the compliance changes which are pertinent to a specific business, reducing the need to hire outside help.    

Another example of the growing ability of the technology is in contract analysis. Software can check to identify higher risk clauses or include prohibitory controls to prevent the execution of contracts which fall outside of an organisation’s safety zone.  

This automation technology is constantly improving, driven by increasingly powerful AI and data analytics. It remains to be seen just how far-reaching the consequences will be for the risk and compliance profession.

VIVIAN CHEN, Ashford Benjamin Ltd.