Podcast: Innovation in Compliance with Tom Fox – Compliance Technology as a Value Center
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In this episode of the Innovation in Compliance Podcast, Brandon Daniels, President of Global Technology Markets at Exiger, joins Tom Fox to discuss how technology is leading the compliance conversation.
- Third party risk management
Tom notes that the market has recognized the need for more robust management of third party risk. Brandon agrees that more people are recognizing that third party risk can define their organizations. Revised US federal guidelines underscore the importance of embedding third party risk management into organizations. This isn’t a peripheral risk, Brandon points out. It’s the kind of risk that can destroy shareholder value, cause significant fines, and consume your brand. Tom adds that third party risk has always been the highest risk for a government intervention in terms of a violation.
- Education Is a key first step
The e-discovery industry is an example of how technology can become central to a company’s function. Twenty years ago e-discovery didn’t exist, but now it’s a central component of any litigation. E-discovery suppliers spent years educating the judiciary about the context, benefits and importance of electronic discovery. Brandon says that vendors in the compliance technology space should use the same model of educating their corporate clients about how their solutions can help to assess and manage third party risk. He says there are several solutions on the market, like Exiger Insight 3PM, that can routinize and scale the diligence and transaction analysis processes.
Vendors first need to help compliance professionals appreciate that technology solutions are defensible, auditable and transparent. Then they must help government understand that it’s very hard to implement good compliance procedures if they are not routinized or supported by technology. Making an investment in compliance automation technology is really an investment in sustainable third party risk management. Brandon posits that this is a time for education and collaboration across the triumvirate of companies, suppliers and government.
- Technology as a value center
Business executives know that risk can be a public good if managed properly. If you use the technology tools Brandon described, risk can also be a competitive advantage. Brandon comments that Exiger advises clients to treat reputational risk as a metric that can help them make smart investment decisions. By analyzing the risk metric of an industry you can determine whether you - or the companies you’re looking to acquire - have appropriate mitigating controls. You can also improve your own controls so that you can make investments in emerging markets with high growth potential but also high-risk potential. Technology therefore transforms the compliance function from a cost center into a value center.