Risk-based compliance monitoring

The Financial Services Authority has adopted a risk-based approach to regulation as the most efficient route to meeting its own statutory objectives under the Financial Services Markets Act 2000. Firms, which face similar resourcing constraints and need to adjust to the new second generation, “non-tickbox”, high-level regulation, are starting to follow suit. Last month, Irwin Spilka, Head, Internal Audit and Compliance of the Stonehage Group, outlined a model for risk-based compliance monitoring. In his second article, Mr Spilka explains how to configure the Compliance Department in order to move from ‘assessing compliance with rules’ to a focus on the ‘effectiveness of management systems’ and provides a clear application of the model and risk mapping.

Configuring a Compliance Department

A Compliance Department needs to implement a number of changes in order to move monitoring from assessing compliance with rules to a focus on the effectiveness of management systems.The change involves: