Tag: Regulatory Change

The Agile Organization: GRC in Context of Regulatory Change

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Change is an intricate machine of chaotic gears and movements and is the single greatest challenge for organizations in the context of governance, risk management, and compliance (GRC). The challenge is the compounding effect of change. Organizations have change bearing down on them from all directions that is constant, dynamic, and disruptive, as I discussed in my previous post The Agile Organization: GRC as a Transformational Process.

Managing this dynamic and intricate nature of change is driving organizations toward improving their approach to regulatory change management as a defined process and integrated part of a GRC strategy within the organization. Organizations are past the point of treading water as they actively drown in regulatory change from turbulent waves of laws, regulations, enforcement actions, administrative decisions, and more around the world. Regulatory compliance and reporting is a moving target as organizations are bombarded with thousands of new regulations and changes to existing regulations each year.

GRC Regulatory activity

What further complicates this is the exponential effect of regulatory change on the business. Business operates in a world of chaos and in that context regulatory chaos. Applying chaos theory to business is like the ‘butterfly effect’ in which a small event actually results, develops and influences what ends up being a significant event. The concept uses the analogy that the simple flutters of a butterfly’s wings create tiny changes in atmosphere that ultimately impacts the development and path of a hurricane.

The typical organization does not have adequate processes or resources in place to monitor regulatory change. Instead . . .

The rest of this post can be found a guest blog on MEGA’s Corporate Governance Blog . . .

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Demand & Market for GRC Content & Intelligence Offerings

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Governance, Risk Management & Compliance (GRC) is something every organization does, but not necessarily does well. All have some approach to GRC whether it is ad hoc and broken, or mature and integrated. Every organization on the planet does GRC in some form or fashion. The official definition of GRC, as defined by OCEG in the GRC Capability Model, is that GRC is “a capability to reliably achieve objectives [governance] while addressing uncertainty [risk management] and acting with integrity [compliance].”

Organizations do not buy GRC they do GRC. However, there is a market for GRC related solutions, services, and content/intelligence. These help organizations in their doing of GRC within their organization and bring organization efficiency, effectiveness, and agility to GRC strategy, processes, and architecture.

A lot of attention has been given to the GRC technology solution market. I was the first to define and model this market back in February 2002 while at Forrester and have continued my nurturing and monitoring of this market. There are over 1,000 providers in the broad GRC market which is currently a $11.89 Billion market, but this does not count the professional services market which is significantly bigger than this. The Enterprise GRC market is about 10% of this figure.

To date, not a lot of attention has been given to modeling and sizing the GRC content and intelligence market.  This market is significantly represented in the above market size figure but not completely. The reason is that there are a lot of GRC content and intelligence solutions that are tied and integrated into technology solutions.  While this is true, many of these same GRC content and intelligence solutions can also be integrated with other GRC technologies and many are agnostic to GRC technology.

The role of content in GRC strategies, solutions, and architecture is becoming significant. Organizations find that they need access to risk and compliance intelligence updates, regulatory changes, risk libraries, audit templates, sanction and watch lists, sample policies, and more. GRC solutions are often differentiating themselves by their ability to provide and integrate a range of content offerings into their solution to provide complete situational awareness in a dynamic business environment.

On Monday, July 13th, GRC 20/20 will be presenting our latest Research Briefing on 2015 Market Analysis: GRC Content & Intelligence Providers. In this research briefing we will discuss the latest drivers and trends for GRC content and intelligence as well as segmentation, size, and forecasting of the GRC content and intelligence market.

GRC 20/20 has mapped 91 GRC Content & Intelligence providers with more than 350 content & intelligence offerings across the following categories (there is some overlap between these categories):

  • Audit Template & Workpaper Libraries
  • Benchmarking Solutions
  • Control Libraries
  • Compliance Forms & Templates
  • Due Diligence & Financial Monitoring
  • EH&S Libraries
  • Geo-Political Risk Monitoring
  • Industry Risk & Regulatory Reporting
  • Legal Cases & Analysis
  • Loss & Incident Databases
  • Negative News Monitoring
  • Policy Libraries
  • Regulatory Intelligence (actionable insight on reg change, not just a library)
  • Regulatory Libraries
  • Reputation & Brand Monitoring
  • Risk Libraries (including KRI, risk registers)
  • Risk Forms & Templates
  • Sanction / Watch Lists (including PEP lists)
  • Third Party Forms & Templates
  • Third Party Monitoring
  • Third Party Shared Assessments
  • Threat & Vulnerability Monitoring
  • Training Libraries

The role of GRC content and intelligence integrated with technology is a growing demand and need in the GRC market.  Organizations are more and more thinking along the lines of GRC architecture to support the range of their technology and content integration needs and not in siloed concepts of a single enterprise GRC technology platform.

Considerations When Purchasing Policy Management Solutions

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This is the second in a series of posts on buying considerations when purchasing GRC solutions.  The GRC Pundit first looked at overall considerations when purchasing GRC solutions, and in this post he turns his focus to Policy Management Solutions.

policy-portalPolicy management is one of the hottest segments in the GRC market. This is apparent in the number of RFPs and inquiries GRC 20/20 is involved in from organizations looking for policy management platforms.

Consider that policies are critical to the organization as they establish boundaries of behavior for individuals, processes, relationships, and transactions. Policies are a critical foundation of GRC. When properly managed, communicated, and enforced policies:

  • Provide a framework of governance. Policy paints a picture of behavior, values and ethics that define the culture and expected behavior of the organization; without policy there is no consistent rules and the organization goes in every direction.
  • Identify and treat risk. The existence of a policy means a risk of has been identified and is of enough significance to have a formal policy written which details controls to manage the risk.
  • Define compliance. Policies document compliance in how the organization meets requirements and obligations from regulators, contracts, and voluntary commitments.

Policies attach a legal duty of care to the organization and cannot be approached haphazardly. Mismanagement of policies can introduce liability and exposure, and noncompliant policies can and will be used against the organization in legal and regulatory proceedings to place culpability. In this context, organizations are struggling with the following issues:

  • Policies haphazardly managed in documents, fileshares, and poorly implemented portals
  • Different departments going in different policy directions
  • Lack of centralized inventory of all organization policies
  • Need to have a defensible audit trail of all interactions with a policy and training
  • Reactive and inefficient training programs
  • Policies that do not adhere to a consistent style, template, format
  • Rogue policies that put liability and exposure on the organization
  • Out of date and inconsistent policies
  • No tracking of policy exceptions

Many organizations lack a coordinated enterprise strategy for policy development, maintenance, communication, attestation, and training. To defend itself, the organization must be able to show a detailed history of what policy was in effect, how it was communicated, who read it, who was trained on it, who attested to it, what exceptions were granted, and how policy violation and resolution was monitored and managed. An organization must establish policy it is willing to enforce — but also must clearly train and communicate policy to make sure that individuals understand what is expected of them.

With today’s complex business operations, global expansion, and the ever changing legal, regulatory and compliance environments, a well-defined policy management program is vital to enable an organization to effectively develop and maintain the policies needed to reliably achieve objectives while addressing uncertainty and act with integrity. This is why organizations are aggressively looking at policy management platforms to address this challenge.

Basic, Common & Advanced Policy Management Solutions

GRC 20/20 has developed an extensive framework of RFP requirements for policy management platforms and advises organizations on RFP development and solutions the organization should be considering. GRC 20/20 covers 144 solutions in the Policy & Training Management Segment of the GRC market.  Eighty-eight of these solutions do policy management, and forty-four do training management (the overlap if you add these together are solutions that do both). Every organization has unique requirements and expectations for policy management. GRC 20/20 has detailed over 200 requirements specific to policy and training management solutions in the GRC market. Overall, policy management solutions can be mapped into the following areas:

  • Basic Policy Management Capabilities. These solutions tend to focus on the back-end of policy management, the development, approval, maintenance of policies. Policies are typically managed as documents and imported into the system as documents or PDFs. Solutions in this area are focused on managing workflow and tasks for managing and maintaining policies. They often have some basic employee portal capabilities aimed at completing tasks such as reading policies and attestation (e.g., certification, read and understood).
  • Common Policy Management Capabilities. These solutions are more built out in feature sets that offer a broader range of capabilities. This includes a stronger user portal and experience to navigate policies, the ability to build forms related to policies and manage workflow and tasks around forms, map policies to regulations and other obligations, and move beyond treating policies as documents to import into the system and have integrated word processing capabilities. These solutions also have capabilities to manage policy exemptions/exceptions, and measure policy compliance. While the employee experience is stronger than those offering basic capabilities, it is still the back-end management of policies that is central to these solutions.
  • Advanced Policy Management Capabilities. Advanced policy management solutions have all the common attributes, but take on more advanced capabilities (note, advanced capabilities extend common capabilities and not all policy management solutions support the range of advanced capabilities). Advanced capabilities tend to put a stronger focus on the employee experience – the front-end of policy management – and not just the back-end experience. Advanced capabilities include:
    • Employee portal experience is clearly stronger offering an intuitive, interactive, personal, and social policy experience for employees. Policies are most often treated as HTML and not PDFs or word processing documents, and the display of policies allows for hyperlink pop-ups for clarification and resources as well as embedding training and other policy tools.
    • Embedded training in which the solution has a full LMS capability to deliver training within the policy portal for employees and they do not have to bounce around through hyperlinks.
    • Social and gamification, as part of the employee portal the solution picks up on social aspects of employees being able to share policies with other employees, provide feedback and interaction on policies, and implement employee avatars with badges for policy and training tasks.
    • Mobility there are dedicated tablet and phone apps offering policies to employees. In fact, GRC 20/20 has been involved in several interactions with organization looking to use tablets as policy and training kiosks for employees in retail, food and beverage, manufacturing, and logistics/transportation.
    • Integration with HR management systems to push policy to new employees or those that have changed roles in the organization.
    • Integration with other GRC modules and solutions such as incident management to map incidents to violations of policy. Or risk management to map risks to policies.
    • Advanced policy authoring and editing capabilities in which policy authoring is done in a browser interface with full redlining, commenting, and editing capabilities.
    • Regulatory change management in which not just documents but chapter and verse of policies is mapped to chapter and verse of regulations and there are clearly defined processes to manage policies in the context of regulatory change.
    • Federated policy management that allows large distributed and diversified organizations to have layers of policy management committees and groups to govern complex policy lifecycles.

These summaries of basic, common, and advanced capabilities are some attributes these areas from GRC 20/20’s broader RFP requirements and analysis of policy management solutions. Organizations need to select what best fits there needs. More advanced capabilities often comes at a more significant cost of the policy management solution.

The most significant trend GRC 20/20 has seen in policy management RFPs and organizational needs is the shift of focus to the front-end of policy management.  Historically, the requirements for policy management have been largely on the back-end management and maintenance of policies with only very basic requirements in the front-end communication and attestation of policies.

Over the past three years there has been a growing trend to put equal or more importance on the front-end communication and access of policies. This is in response to organizations desiring to create a single portal for all organization policies, engage employees, and provide defensible audit trails and compliance records.  One organization even requested that the policy portal have a capability to have a green light in a corner if the policy subject matter expert is at their desk and pop-up a box to ask them a question (they used a direct analogy to online shopping with a ‘can we help you’). The overall trend is that organizations desire an engaging policy portal for employees as much as they do the back-end development of policies.OCEG.GRC Illustrated.Interactive Policy.2014

CASE IN POINT: I did the design and layout of the OCEG GRC Illustration: Engaging Employees With Interactive Policies. I have had several organizations specifically reference this illustration and state “this is what we want, who does this.”

 

Questions & Considerations to Ponder on Policy Management Solutions

Organizations considering policy management solutions should ask themselves the following questions to help guide them in developing requirements and engaging solution providers:

  • What are my back-end policy lifecycle management requirements?
  • What are my front-end policy portal and employee experience requirements?
  • Is the front-end portal as important as the back-end?
  • Do we want to develop policies in standard word processors and import them as documents/PDFs into the solution to manage?
  • Do we want to develop policies within the solution/browser interface?
  • Do we need to map policies to hotline reports, issues/incidents, controls, or risks?
  • What are our requirements for regulatory change management in context of keeping policies current?
  • What are our requirements for having a full audit and compliance trail of all interactions between policies and employees?
  • Do we desire an integrated LMS capability to manage policies and training as a collective whole in an integrated portal?
  • Do we need the capability to manage policy related forms and manage those forms through workflow and tasks for review and approval/disapproval (e.g., gifts and entertainment, conflict of interest, medical leave, political contributions)?
  • What are out mobility requirements for policy and training on tablets and smartphones?
  • Do we need to integrate with HR management systems to automate the communication of policies to new employees and those that have changed roles?
  • Do we need features of socialization and gamificaiton on the policy portal?
  • What are our internationalization and language requirements for both the back-end management of policies and the front-end policy portal?
  • What are our requirements to track and manage policy exceptions and exemptions?
  • Do we need a solution that can support federated policy management to address the need for multiple layers of policy committees and a complex policy lifecycle?

These are a subset of a broader set of questions that will be categorized and mapped in the forthcoming Buyers Guide: Policy Management Solutions, and are further detailed in GRC 20/20’s RFP requirements for policy management solutions. GRC 20/20 will be releasing the following research in the next several weeks:

  • Buyer’s Guide: Policy Management Solutions. The Buyer’s Guide goes into a detailed framework in how to approach purchasing policy management platforms.
  • Strategy Perspective: Policy Management by Design. The Strategy Perspective focuses on best practices in defining a policy governance committee, framework, lifecycle, and architecture (written from context of GRC 20/20’s Policy Management by Design Workshops).
  • Online directory of Policy & Training Management Solutions. The directory lists policy and training management solutions that GRC 20/20 covers in the market and is the first part of the broader GRC Directory being rolled out in stages.
  • Market Perspective: Policy & Training Management Solutions. This details the overall drivers, trends, market size, growth, and forecasting of the Policy & Training Management Market.

I have shared my thoughts on some buying considerations of policy management solutions. I would love to hear your thoughts and reaction to this as I work on publishing this series of GRC 20/20 research.

Regulatory Change Management Maturity Model: From Ad Hoc to Agile

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This is part 5 and final post in the series on regulatory change management, part of the broader series of posts on the Greatest GRC Challenges companies are facing today.  Next we will look at changing risk environments.  In the previous posts we explored:

In this post I detail GRC 20/20’s maturity model to measure regulatory change management programs to support an efficient, effective, and agile process. These posts are excerpts from the broader GRC 20/20 Research Paper: Regulatory Change Management: Effectively Managing Regulatory Change

Mature regulatory change management requires the organization to align on regulatory risk. It also involves participation across the organization at all levels to identify and monitor uncertainty and the impact of regulatory change.

GRC 20/20 has developed the Regulatory Change Management Maturity Model to determine an organization’s maturity in regulatory change management processes as well as information and technology architecture.

The GRC 20/20 Regulatory Change Management Maturity Model is summarized as follows:

Level 1 – Ad Hoc

Organizations at this stage lack a structured approach to regulatory change management and are constantly putting out fires and being caught off guard. Few if any resources are allocated to monitor regulatory change. The organization addresses regulatory change in a reactive mode—doing assessments when forced to. There is no ownership or monitoring of regulatory change and certainly no integration of regulatory change information and processes. Characteristics of this stage are:

  • Lack of a defined regulatory taxonomy
  • Ad hoc and reactive approaches to regulatory and business change
  • Document and email-centric approaches
  • Lack of accountability

Level 2 – Fragmented

In the Fragmented stage, departments are focused on regulatory change management within respective functions—but information and processes are highly redundant. The organization may have limited processes for regulatory change but largely does not benefit from the efficiencies of an integrated approach. Regulatory change management is very document-centric and lacks an integrated process, information and technology architecture. Positively, there is some structure to regulatory change responsibilities—but the management of regulatory change lacks accountability as it is done largely in documents and email that lack structures of accountability and automation. Characteristics of this stage are:

  • Varied approaches to regulatory change
  • Lack consistent structure
  • Lack integration or formal processes for sharing regulatory information
  • Reliance on fragmented technology with a focus on discrete documents

Level 3 – Managed

The Managed stage represents a mature regulatory change management program that is using technology for structured workflow, task management, and accountability. Regulatory change functions have defined processes for regulatory change management, an integrated information architecture supported by technology and ongoing reporting, accountability, and oversight. Though there is no integration of regulatory content feeds into the technology platform. Characteristics of this stage are:

  • Visibility into regulatory change across the business
  • Established processes for regulatory change
  • Good use of technology to manage accountability

Level 4 – Integrated

It is at the integrated stage that the organization begins to integrate regulatory content feeds into the technology platform for automation. The organization has consistent regulatory taxonomy, process, information, and technology to streamline regulatory change management processes. The organization is seeing gains in addressing regulatory change through shared information that achieves greater agility, efficiency and effectiveness in a common technology architecture that enables consistent management of regulatory change. Standardized workflow is integrated into regulatory and legal content feeds. Characteristics of this stage are:

  • Strategic approach to regulatory change across departments
  • Common process, technology and information architecture
  • Integration of legal/regulatory content feeds
  • Reporting across departments

Level 5 – Agile

At the Agile stage, the organization has completely moved to an integrated approach to regulatory change management across the organization. This results in a shared-services approach in which core regulatory change technology, content, and processes are shared centrally. The approach is characterized through a mature regulatory taxonomy with integrated and actionable regulatory content automated by technology. The organization has enterprise workflow that provides business-process automation for regulatory change with oversight and management of regulatory change. Regulatory content feeds deliver fully analyzed content that identifies relevancy, impacts and tasks. Characteristics of this stage are:

  • Regulatory intelligence achieved through integration of analyzed content and enterprise technology
  • Consistent views of regulatory change and impact on operations and policies
  • Able to efficiently manage business change in regulatory context

GRC 20/20’s Final Perspective

The constant changes in today’s regulatory environments translate to a growing burden on organizations in terms of the number of regulations they face and their scope. Many organizations do not possess the necessary regulatory change management infrastructure and processes to address these changes and, consequently, find themselves at a competitive disadvantage and subject to regulatory scrutiny and losses that were preventable. These organizations can greatly benefit from moving away from manual and ad hoc process changes and toward a system specifically designed to manage those changes comprehensively and consistently. Such a system gathers and sorts relevant information, routes critical information to subject matter experts, models and measures potential impact on the organization, and establishes personal accountability for action or inaction.

 

GRC Architecture to Manage Regulatory Change

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This is part 4 on the topic of regulatory change management.  In the previous posts we explored:

In this post I detail the information and technology architecture needed to support an efficient, effective, and agile regulatory change management process. These posts are excerpts from the broader GRC 20/20 Research Paper: Regulatory Change Management: Effectively Managing Regulatory Change

Effectively managing regulatory change is done with a GRC information and technology architecture to improve processes and transform manual document and email-centric processes. Organizations use technology to document, communicate, report, monitor change, and facilitate business impact analysis.

 

Regulatory Change Management Architecture Goals

A GRC information and technology architecture helps the organization to manage regulatory change to:

  • Ensure that ownership and accountability of regulatory change is clearly established and understood.
  • Manage ongoing business impact analysis and scoring.
  • Integrate regulatory intelligence feeds that kick-off workflows and tasks to the right SME when change occurs that impacts the organization.
  • Monitor the internal organization’s environment for business, employee, and process change that could impact the firm’s state of compliance.
  • Identify changes in risk, policy, training, process, and control profiles based on regulatory change assessments.
  • Visualize the impact of a change on the organization’s processes and operations.

The right GRC information and technology architecture allows compliance and regulatory experts to profile regulations, link with external content feeds and content aggregators, and push new developments or alerts into the application and disseminate for review and analysis. It delivers effectiveness and efficiency using technology for workflow, task management, and accountability documentation—allowing the organization to be agile amidst change. It enables the organization to harness internal and external information and be intelligent about regulatory environments across the organization.

Regulatory Change Management Architecture Considerations

In evaluating regulatory change management solutions that integrate regulatory intelligence feeds and technology, organizations should ask the following three questions:

  1. How adaptable is the regulatory taxonomy?  The regulatory taxonomy provides the backbone of regulatory change management as it maps regulations to other objects such as business processes, assets, subject matter experts, risks, controls, policies and more. Organizations should specifically understand how adaptable the taxonomy/mapping is to fit the organization’s environment, evolve as the business evolves, and how easy it is to adapt the metadata and taxonomy structure.
  2. How rich is the regulatory content? A lot of GRC solutions can handle the workflow and task management of regulatory change management. What really differentiates capabilities is the depth and breadth of the regulatory intelligence content feeds that the solution offers. This includes regulator coverage, geographic coverage, supporting news and analysis, frequency of updates, and actionable content/recommendations.
  3. How strong is the technology? As stated, a lot of solutions can do workflow and tasks management for regulatory change, so the evaluation of the technology itself needs to go deeper in the systems ability to integrate regulatory intelligence feeds, conduct business impact analysis, as well as connect and understand relationships of regulatory impact to policies, processes, and risks. Of particular importance is the user experience.  SMEs across the enterprise may or may not be technical gurus; the overall user experience should be intuitive and natural.
    • Deficient technology involves documents and spreadsheets with email used as a workflow and task management tools. The organization struggles with things getting missed and not having a structured system of accountability.
    • Moderate technology provides a system of accountability with basic workflow and task management, but the integration of regulatory developments/updates is a manual entry system that is time-consuming and taxing on resources.
    • Strong technology for regulatory change management has enterprise content, workflow and task management capabilities with integration to actionable regulatory content.  It enables a closed-loop process as it delivers and integrates regulatory content and insight with technology in an integrated architecture. It also allows the indexing and mapping of regulations to other GRC elements.

Regulatory Change Management Architecture Capabilities

All of these elements are critical and are why they come together in a GRC architecture or platform for regulatory change management. Some solutions in the GRC space are delivering across these three elements and are being used to gather regulatory information, weed out irrelevant information, and route critical information to SMEs responsible for making a decision on a particular topic. This at a minimum requires workflow and task management capabilities, but in mature systems it provides direct integration with regulatory content aggregators. These aggregators manage regulatory profiles, and provide data about relevant new developments that can be routed to individuals responsible for evaluating specific regulatory subject areas. Advanced solutions map regulatory changes to the appropriate metadata as part of a fully integrated, dynamic, and agile process.

Specific capabilities to be evaluated in a GRC solution for regulatory change management, include:

  • Regulatory intelligence content.  At a very basic level, the solution should allow for simple manual entry of new changes and updates so they can be routed to the correct SME for analysis. More advanced solutions provide the interface to content to search for related laws, statutes, regulations, case rulings, analysis, news, and information that intersect with the change and could indicate regulatory risks that need to be monitored actively. The solution needs to automatically capture and access regulatory related information and events from various external sources that are flagged as relevant to the business. This capability helps ensure that regulatory affairs and compliance teams are up-to-date on new, changing, or evolving regulatory requirements. Regulatory intelligence feeds should be easily configured and categorized in the regulatory taxonomy, providing a powerful and comprehensive inventory of changes in laws and regulations. The regulatory content should identify information such as geographic area/jurisdiction, issuing regulatory body, subject, effective date, modification date, end date, title, text, and guidance for compliance. The guidance should give commentary on how regulatory alerts are effectively transformed from rules into actionable tasks and modifications to internal policies and processes.
  • Content management. The solution should be able to catalog and version regulations, policies, risks, controls and other related information. It should maintain a full history of how the organization addressed the area in the past, with the ability to draft new policies, assessments, and other compliance responses for approval before implementation. The solution needs to provide a central repository for storing and organizing all types of regulations and laws based on various templates and classification criteria, within a defined taxonomy. The system should be able to maintain a history of actions taken and analysis, including review periods, and obsolescence rules that can be set for regulations.
  • Process management. A primary directive of a defined regulatory change management process is to provide accountability. Accountability needs to be tracked as regulatory change information is routed to the right SME to take review and define actions. The SME should be notified that there is something to evaluate and given a deadline based on an initial criticality ranking. The SME must be able to reroute the task if it was improperly assigned or forward it to others for input. Individuals and/or groups of SMEs must have visibility into their assignments and time frames. The built-in automatic notification and alert functionality with configurable workflows facilitates regulatory change management in the context of the organization’s operations.
  • Business impact analysis. The system needs to provide functionality to identify the impact of changes of regulations on the business environment and its operations and then communicate to relevant areas of the organization how the change impacts them. This is conducted through a detailed business impact analysis in the platform and is facilitated by being able to tag regulatory areas/domains to respective businesses and products. The overall system needs to be able to keep track of changes by assessing their impact, and triggering preventive and corrective actions. Furthermore, the solution should ensure that stakeholders and owners are informed, tasks related to actions are assigned, and due dates for the completion of actions/tasks are defined. Similarly, when regulations are removed, repealed or deactivated, the solution assesses the impact of the change, and sets up the appropriate responsive actions.
  • Mapping regulations to risks, policies, controls and more. A critical component to evaluate is the solution’s ability to link regulations to internal policies, risks, controls, training, reports, assessments, and processes. The ability to map to business lines, products, and geographies allows companies to manage a risk-based approach to regulatory compliance. The workflow, defined above, automatically alerts relevant stakeholders for necessary action and process changes. It also supports electronic sign-offs at departmental and functional levels that roll up for executive certifications.
  • Ease of use. Regulatory experts are not typically technical experts. The platform managing risk and regulatory change has to be easy to use and should support and enforce the business process. Tasks and information presented to the user should be relevant to their specific role and assignments.
  • Audit trail and accountability. It is absolutely necessary that the regulatory change management solution have a full audit trail to see who was assigned a task, what they did, what was noted and if notes were updated, and be able to track what was changed. This enables the organization to provide full accountability and insight into whom, how, and when regulations were reviewed, measure the impact on the organization, and record what actions were recommended or taken.
  • Reporting capabilities. The solution is to provide full reporting and dashboard capabilities to see what changes have been monitored, who is assigned what tasks, which items are overdue, what the most significant risk changes impacting the organization are and more. Additionally, by linking regulatory requirements to the various other aspects of the platform including risks, policies, controls and more, the reporting should provide an aggregate view of a regulatory requirement across multiple organization units and business processes.
  • Flexibility and configuration. No two organizations are identical in their processes, risk taxonomy, applicable regulations, structure, and responsibilities. The information collected may vary from organization to organization as well as the process, workflow, and tasks. The system must be fully configurable and flexible to model the specific organization’s risk and regulatory intelligence process.

Defining a Regulatory Change Management Process

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This is part 3 on the topic of regulatory change management.  In the previous posts we explored the pressure organizations are under in context of regulatory change, in this post we look at what elements are needed in an efficient, effective, and agile regulatory change management process.

processOrganizations are struggling with regulatory change and seeking to integrate technology with actionable and relevant regulatory change content to support consistent regulatory change processes. A dynamic business environment requires a process to actively manage regulatory change and fluctuating risks impacting the organization. The old paradigm of uncoordinated regulatory change management is a disaster given the volume of regulatory information, the pace of change, and the broader operational impact on today’s risk environment.

Elements of a Regulatory Change Management Process

Regulatory change management requires a process to gather information, weed out irrelevant information, route critical information to SMEs to analyze, track accountability, and determine potential impact on the organization. The goal should be a regulatory change management strategy that monitors change, alerts the organization to risk conditions, and enables accountability and collaboration around changes impacting the firm. This requires a common process to deliver real-time accountability and transparency across regulatory areas with a common system of record to monitor regulatory change, measure impact, and implements appropriate risk, policy, training, and control updates. To achieve this financial services organizations must develop a process for collaboration, accountability, and integration between regulatory intelligence content providers within a GRC information and technology architecture. A well defined regulatory change management processes includes:

  • Regulatory taxonomy and repository. The foundation of regulatory change management is a regulatory taxonomy and repository. The regulatory taxonomy is a hierarchical catalog/index of regulatory areas that impact the organization. Regulations are broken into categories to logically group related areas (e.g., employment and labor, anticorruption, privacy, anti-money laundering (AML), fraud).  Integrated with this taxonomy is a repository of the regulations indexed into the taxonomy. One regulation may have multiple links into the taxonomy at different areas. The taxonomy and repository maps into the following elements:
    • Regulatory bodies (e.g., lawmakers, central banks, government bodies, regulators, self-regulatory organizations (SROs), exchanges, clearers, industry associations, trade bodies)
    • Document types (e.g., laws, regulations, rules, guidance, releases)
    • Sources (e.g., websites, RSS feeds, newsletters, etc.)
    • Attributes needed for classification, filtering, and reporting (e.g., business process, jurisdiction/geography, related regulations, regulator, status of change, relevant dates, consequences)
    • Rules & regulatory events
  • Regulatory roles and responsibilities. Success in regulatory change management requires accountability—making sure the right information gets to the right person that has the knowledge of the regulation and its impact on the organization. This requires the identification of SMEs for each regulatory category defined in the taxonomy. This can be subdivided into SMEs with particular expertise in subcategories or specific jurisdictions, or who perform specific actions as part of a series of changes to address change requirements.
  • Regulatory content feeds. To support the process of regulatory change management, the financial services organization should identify the best sources of intelligence on regulatory developments and changes. Content feeds can come directly from the regulators as well as law firms, consultancies, newsletters, blogs by experts, and content aggregators. The best content includes the regulation itself, summary of the change, impact on typical financial services organizations, and recommendations on response with suggested actions for response. The range of regulatory change content should span new regulations, amended regulations, new legislation, regulatory guidance, news and circulars, comment letters, enforcement actions, feedback statements, and regulator speeches.
  • Standard business impact analysis methodology. To maintain consistency in evaluating regulatory change, financial services organizations should have a standardized impact analysis process that measures impact of the change on the organization to determine if action is needed and prioritize action items and resources. This includes identifying related policies, controls, procedures, training, tests, assessments, and reporting that need to be reviewed and potentially revised in the context of the change. The analysis may indicate a response to simply note that the change has no impact and the organizational controls and policies are sufficient, or it may indicate that a significant policy, training, and compliance-monitoring program must be put in place.
  • Workflow and task management. The backbone of the regulatory change management process is a system of structured accountability to intake regulatory changes from content feeds and route them to the right subject matter expert for review and analysis. This is extended by getting others involved in review and response and requires some standardized workflow and task management with escalation capabilities when items are past due. The process needs to track accountability on who is assigned what tasks; establish priorities; and determine appropriate course of action.
  • Metrics, dashboarding & reporting. To govern and report on the regulatory change management process the organization needs an ability to monitor metrics and report on the process to determine process adherence, risk/performance indicators, and issues. This should provide the organization a quick view into what regulations have changed, which individuals in the organization are responsible for triage and/or impact analysis, the state of review of change, who is accountable, and overall risk impact on the organization.

Types-of-Metrics-&-Examples

Value and Benefits of a Regulatory Change Process

When organizations develop a regulatory change process they expect to be:

  • Effective. They seek to have a greater understanding of changing regulatory requirements and their impact on the organization. To enable the organization to be proactive in gathering, organizing, assessing, prioritizing, communicating, addressing and monitoring the regulatory change. This allows the organization to demonstrate evidence of good compliance practices.
  • Efficient. To allow the organization to optimize human and financial capital resources to consistently address regulatory change and enable sustainable management of resources as the business and regulatory landscape grows.
  • Agile. Competitively enable a dynamic and changing environment as an advantage over competitors that are handicapped by the same change.  This requires the organization to understand how the regulatory environment effects the organization and its strategy and how to adapt quickly and be responsive to new developments before competitors are.

The full paper on this topic in the context of financial services can be found here.

2014 GRC Technology Innovation Award: Be Informed Empowers Organizations to be Agile in the Midst of Regulatory Change

The GRC Pundit BlogPublished onLeave a Comment on 2014 GRC Technology Innovation Award: Be Informed Empowers Organizations to be Agile in the Midst of Regulatory Change

The 2014 GRC Technology Innovation Awards was filled with competition.   Nominations increased to 62 over last year’s awards, and fifteen winners were selected.  GRC 20/20 looked through all of the submissions, asked for clarification where needed, and selected15 recipients that demonstrated outside the box thinking in taking GRC in new directions to receive this year’s award.

Be Informed Empowers Organizations to be Agile in the Midst of Regulatory Change

The Be Informed GRC-solution is based on the Be Informed business process platform, which is a platform using innovative semantic technology which can be understood as a shared vocabulary of business concepts describing the terminology of products, services, processes, activities, business knowledge and policies. It is fully model-driven, which means that requirements and specifications are expressed in semantic models, which can be directly executed, i.e. without transformation to another (programming) environment. This constraint-based process approach allows for dynamic processes, by which every individual transaction has its own process flow, depending on the data and context of that transaction.

The Be Informed semantic technology enables the dynamic management of regulations and changes in the GRC environment.  This allows organizations to stay current with the ever-continuing stream of new and changing regulations.  Organizations will find that regulatory change alongside business change and risk change becomes easier to manage, control, and traceable. Semantic models determine behavior of the business within rules. With Be Informed, the rules of business are modeled, not coded, in a visual and very comprehensible way for business users. This enables users to easily understand and change business rules, making the Be Informed business process platform an agile solution.

Be Informed through its semantics engine allows organizations to be in full control. In the GRC-space this means being able to handle complexity and change (e.g., regulatory change, business change, risk change), to provide a holistic integrated view of change, to enable transparency, and have complete insight and overview of accountability domains – on both content and process.  This is enhanced by audit trails that demonstrate accountability to customers, employees, shareholders and supervisory authorities.

By using the semantic models, you can define the requirements in an accurate, concise and machine executable format. Semantic models are used to make decisions, to classify what is applicable (and/or needed) and to calculate values. These outcomes are used to determine which controls are applicable, which data is needed to perform activities, how to drive the workflow process and even to determine which components of a report must be generated.

The Be Informed framework consists of three parts. The first part is the Definition part by using semantic models. Here Regulations and Policies are translated into regulatory and risk controls.  Second, once a control is defined it can be executed as a service in any of the core processes of the organization as represented. A transaction can only be completed if all necessary controls have resulted in a positive outcome. And third, Be Informed supports the review and evaluation of the effectiveness of the controls by planning, scheduling and executing of all kinds of assessments with the GRC-Workplace.

To learn more about the GRC 20/20 2014 GRC Innovation Awards and other recipients, please visit this post: GRC 20/20 Announces 2014 GRC Innovation Award Recipients

2014 GRC Technology Innovation Award: MetricStream Offers Capability to Actively Deliver GRC Content from Multiple Sources

The GRC Pundit BlogPublished on1 Comment on 2014 GRC Technology Innovation Award: MetricStream Offers Capability to Actively Deliver GRC Content from Multiple Sources

The 2014 GRC Technology Innovation Awards was filled with competition.   Nominations increased to 62 over last year’s awards, and fifteen winners were selected.  GRC 20/20 looked through all of the submissions, asked for clarification where needed, and selected15 recipients that demonstrated outside the box thinking in taking GRC in new directions to receive this year’s award.

MetricStream Offers Capability to Actively Deliver GRC Content from Multiple Sources

MetricStream’s GRCIntelligence.com is an innovative cloud-based content portal that enables GRC professionals to access and integrate the latest GRC content from a variety of knowledge providers and information sources through a single online content store – GRCIntelligence.com.  GRCIntelligence.com makes curated intelligence available to all users within the enterprise adding significant value and increasing the effectiveness of the GRC program within the organization. The portal is integrated with MetricStream GRC Platform, thus providing subscribers with content updates and notifications directly within the MetricStream GRC application.

GRCIntelligence includes:

  • Curated content store. The GRCIntelligence.com portal serves as a one-stop shop for curated intelligence sources from partners and domain experts across industries for all GRC needs.
  • Direct delivery model. Automatically delivers subscribed content from the GRCIntelligence.com content store into the subscriber’s MetricStream GRC application through the GRCIntelligence application.
  • Content recommendations engine. Content recommendations engine within the MetricStream application based on user activity and social profiles.

GRCIntelligence.com enables GRC practitioners across the enterprise to purchase contextually relevant GRC content via credit card or purchase orders and have the content delivered automatically into their MetricStream GRC application for immediate use. This paradigm shift enables organizations to source and integrate GRC content from multiple sources across risk, compliance and audit with their MetricStream GRC applications in real-time. It also allows content updates to be notified to end-users via RSS feeds, system alerts or email.

The GRCIntelligence.com portal currently offers content from more than 50 content partners and sources including Unified Compliance Framework (UCF), Risk Spotlight, Shared Assessments, Code of Federal Regulations (CFR), and Clear Market Practices, and is adding new content partners and sources to its portfolio. A subscriber can choose from a range of content sources including regulatory updates, risk and control libraries, policy updates, market intelligence, and news feeds to receive periodic updates. The portal allows users to identify relevant content by leveraging features such as capability to filter results by content type, industry, role, and function with an intuitive and user-friendly interface.

The content is delivered into the subscriber’s MetricStream GRC application through channels that are setup in the GRCIntelligence application layer within the client installation of MetricStream. Once the content is in, MetricStream users have the capability to review the content, identify internal action items, log issues, trigger workflows, and notify users. The incoming content is stored in the Big Data store within the MetricStream client application and it can be selectively pushed into operational data store within MetricStream applications.

To learn more about the GRC 20/20 2014 GRC Innovation Awards and other recipients, please visit this post: GRC 20/20 Announces 2014 GRC Innovation Award Recipients

2014 GRC Technology Innovation Award: ngCompliance’s Sherlock Makes Regulatory Change and Policy Management ‘Elementary and Deductive’

The GRC Pundit BlogPublished onLeave a Comment on 2014 GRC Technology Innovation Award: ngCompliance’s Sherlock Makes Regulatory Change and Policy Management ‘Elementary and Deductive’

The 2014 GRC Technology Innovation Awards was filled with competition.   Nominations increased to 62 over last year’s awards, and fifteen winners were selected.  GRC 20/20 looked through all of the submissions, asked for clarification where needed, and selected 15 recipients that demonstrated outside the box thinking in taking GRC in new directions to receive this year’s award.

ngCompliance’s Sherlock Makes Regulatory Change and Policy Management ‘Elementary and Deductive’

ngCompliance’s innovation is the ability to automate the analysis of regulatory changes against the organizations policies and procedures. The solution is called Sherlock and it makes regulatory change management and mapping elementary and deductive.  Sherlock has a rule-mapping module that allows the organization to create a mapping between applicable laws and regulations on one hand, with the organizations policies, processes and procedures on the other hand. This mapping can be used to demonstrate whether the organization operates in line with regulatory requirements and it can disclose gaps. Whenever there is a regulatory change, it can be used to quickly identify the impact on business areas, policies and procedures and initiate a change management process to timely realign. Amazingly, the system does so cross lingual that allows the organizations to map and analyze policies written in other languages, for example Chinese against regulations written in English.

This automates what has historically been a manual process of cross-referencing policies to regulations within GRC solutions or within documents and spreadsheets to prove to regulators that all policies and procedures are in line with rules and regulations. ngCompliance’s innovation significantly reduces the manual work as initial mapping is generated by their Sherlock system. The mapping should be reviewed by subject matter experts, but it significantly reduces the work of building mappings manually.

Organizations that adopt this innovation, no longer need to allocate this task to a big workforce. This allows for reduced cost and time spent in administrative activities of compliance, regulatory change, and policy maintenance. Once Sherlock creates a mapping, it allows the user to evaluate the mapping and confirm correctness or make adjustments. Any time there is a regulatory change, the system submits to the user an impact analysis on which policies or steps in procedures are impacted. Because the user sees both the policy text as the related legislation or regulation changes, the user can immediately give the appropriate advice on the required changes and start necessary change management workflows.

As the regulatory mapping functionality can also be used to verify norms against contracts, the system can also be used to identify the most high risk contracts and pull those up, in combination with analytics analyzing the risk in third party relationships, it will alert on high risk third parties that need review and facilitate mitigating controls on the relationship (e.g. change management on the contract).

The system reads the regulation and analyzes the text. Based on text-analytics, definitions based on financial and legal terms are extracted from the article and converted into a tree representation. The same is done on paragraphs of policies and steps of procedures. Because they are converted back to a definitions structure it takes into account synonyms and differences in languages. A mapping engine compares the definition trees and builds appropriate connections between legislation/regulation text and policy/procedure text. When employees look at policies they are able to also see the related regulations. The context that is built during analysis of texts is used to make sure the connections match the contexts, e.g. articles applicable to organizations with a banking license are only shown once the process is within the organization of a bank.

Sherlock keeps track of all history that can be used to look back in time and verify alignment of organizational procedures with applicable legislation and regulation. In this way it is easy to demonstrate the level of compliance of the organization at any given moment in the past. Sherlock comes with a unique feature that can create the initial mapping from rules to internal policies and procedures, regardless of the number of jurisdictions it has to take into account or the number of languages it has to deal with. This way Sherlock contributes to a significant decrease of the organizations administrative burden.

The Sherlock solution allows for adding web locations that are used by regulators or other organizations that publish regulatory information, in addition to your normal regulatory feeds. The synchronization functionality ensures that the regulatory information stored in the database is always accurate without the need to maintain this manually. In addition, a historical trail on the regulatory developments is maintained. Any information that is found on the web and seems to be of relevance for Compliance can be included in the legal framework, either by means of the synchronization functionality or the quick-browse-and-add feature of Sherlock. When any regulatory change enters the legal framework in Sherlock, or when the legal framework detects a change from a regulator’s site it is monitoring, the solution will notify this to the user according to specified needs on the dashboard, in the task inbox, by email or compliance wiki. The solution can filter and sort on relevance, and can even distribute to different users based on jurisdiction, language, topic or expertise.

To learn more about the GRC 20/20 2014 GRC Innovation Awards and other recipients, please visit this post: GRC 20/20 Announces 2014 GRC Innovation Award Recipients

2014 GRC Technology Innovation Award: UCF Demonstrates it is the Science of Compliance Through its Most Recent Patent

The GRC Pundit BlogPublished on1 Comment on 2014 GRC Technology Innovation Award: UCF Demonstrates it is the Science of Compliance Through its Most Recent Patent

The 2014 GRC Technology Innovation Awards was filled with competition.   Nominations increased to 62 over last year’s awards, and fifteen winners were selected.  GRC 20/20 looked through all of the submissions, asked for clarification where needed, and selected 15 recipients that demonstrated outside the box thinking in taking GRC in new directions to receive this year’s award.

UCF Demonstrates it is the Science of Compliance Through its Most Recent Patent.

The Unified Compliance Framework has recently received a patent for its applied technology for the structure, process for interpretation, quality assurance, and most particularly the segmentation and mapping of regulations. The UCF has been around for several years; the innovation recognized is their recent patent, process, and schema for segmenting and mapping regulations that will take the UCF well beyond the focus of IT compliance they have been successful with in the past. The solution will be delivered to vendors and corporate customers in the way of a RESTful API, XML tables, and interactive applications.

The Unified Compliance Framework has received the first ever patent for a compliance requirement segmentation and mapping framework. The patent was granted rapidly as the US Patent and Trademark Office stated that there has been nothing like it filed. This means that the UCF is the only GRC framework that has patented SNED values that can instruct GRC solutions as to which records are the Same, New, Edited, and Deprecated by using a single character to manage regulatory and requirement change.  This is supported by an end to end process that reaches from the Authority Document (AD) on one end, through the Authority Document’s Citations, to harmonized Common Controls, and out to Audit/Assessment Questions with supporting evidence. The UCF has a hierarchical structure wherein a parent and sort value can be assigned to any hierarchical record. This allows GRC solutions to plug into the UCF and automatically be able to display a list in original form, replicating legal or even “book” structures of original regulatory/requirement documents. GRC solutions utilizing UCF will be able to automatically discern how to handle audit questions and the necessary “skip logic” used when presenting hierarchical audits. Further, the schema allows for the breaking down of Citations and Common Controls into primary verb-noun pairs to “prove” the mapping of the Citation to the Common Control.

The business functionality is simple: any organization building out a GRC database or GRC solution can leverage the UCF’s patented structure to jump start their GRC strategy. There are already other firms such as Accenture that are now filing derivative work patents on top of the UCF’s patent.

To learn more about the GRC 20/20 2014 GRC Innovation Awards and other recipients, please visit this post: GRC 20/20 Announces 2014 GRC Innovation Award Recipients