When we were just thinking that things are returning to normal, boom, you once again have the deadly coronavirus making news.
As per recent headlines, the new Coronavirus strain found in the UK could make it more difficult for the world to contain the spread. The situation once again is becoming alarming, and this time we need to be careful than ever.
And to mindfully handle this situation, several businesses across the globe are going digital and virtual. But this exactly is what plays a catalyst in organizational risks, making enterprise risk management extremely essential.
As the pandemic has brought the world to a standstill, it has simultaneously created grave economic issues. On the dark side, the financial and banking sector has slowly started to witness the tremors too. With a number of sectors struggling to maintain the economic conditions, regulators across industries have observed and recognized the need for tighter regulatory compliance.
How is the regulatory backdrop changing?
The year of the virus has created global stress and is testing all businesses’ financial, operational, and commercial resilience. Additionally, governments have equal pressure to adjust to newer ways of operating a business and recovering tax revenue to be able to pay for COVID-19 protective policies.
New legislation concerning the OECD’s BEPS initiatives (Organisation for Economic Co-operation and Development’s, Base erosion and profit shifting initiatives) and GRI revisions (Global Reporting Initiative) will also play an essential role in impacting compliance topics, like Permanent Establishment (PE). Additionally, Brexit and Posted Workers Directives are significantly responsible for material changes in business responsibilities and obligations that will result in penalties for non-compliance.
Against this backdrop, the financial services sector must adapt rapidly and at scale to current constraints and market conditions.
The upcoming set of tax regime changes and newer regulations need executives to make noteworthy adjustments to their existing business models, business process, and resource planning.
Most importantly, in these tough times when several businesses are witnessing negative revenues as a side effect of the pandemic, it is even more critical for business leaders to make sure that all their financial obligations are set right to avoid any kind of financial penalties for being non-compliant.
In some cases, the impact can get harsher than a financial penalty and can wrongly impact the brand and its reputation.
As the second wave of COVID-19 makes headlines, business leaders are eyeing the risks and evaluating how to get work done in the pandemic era.
According to the Gartner Emerging Risks Survey, where the company has recorded and assessed the opinion of senior leaders in risk, finance, and compliance at leading companies, state that executives have also come across risks related to the functioning of enterprises amidst the pandemic that sounds concerning.
Matt Shinkman, Practice Vice President, Gartner, says, “The largest implication for organizations planning around the second wave and related impacts is to ensure that they have not only adequate reentry plans but also ‘re-exit’ plans if the pandemic makes returning to physical office locations unsustainable.”
In response, leading enterprises are working in sync with ERM (enterprise risk management) squads to develop clear protocols, in case positivity rates in the organization surge.
Key steps to manage risks:
Regular and dynamic risk assessment
Compliance needs to establish a dynamic process to take into account actions and guidance from regulators and the government, along with the business strategy and the businesses’ crisis response. These aspects must be implemented more on an urgent basis with less bureaucracy. Likewise, the decisions taken based on risk assessment must be executed in real-time to boost the response.
Alter activities and focus toward a new normal
Compliance needs to be thought about in different parts and effects to ideally deploy its resources to manage risks in the new environment. Electronic communication security is another aspect that needs to be intensified, considering the shift toward digital communication channels.
It also is possible to redeploy non-critical teams to handle more risk-driven activities. And as resources are shuffled or shifted, it is essential to take a step back at regular checkpoints and evaluate changes made to adapt to the new normal by modifying the plan of action as and when required.
Readjust focus to medium-term compliance strategy
To stay in sync and focus on key compliance risks, it is essential to work with business teams to get an idea about business strategy changes and risk profile changes. Considering the increase in the remote working module, certain plans like electronic communication surveillance upgrades and workflow tools can be accelerated while others can be slowed down.
Given the COVID-19 pandemic, risk professionals need to be ready for almost everything. During unprecedented events like these, which have no clear endpoint, risk management professionals can help their organizations manage risk with crisis management and response.
Here is a rundown on crisis management and response: what risk professionals need to know:
- What is your business’s readiness quotient to react and respond to COVID-19 or any other unforeseen risk event?
- Given the dependence on third parties, what is the state of their crisis management and business continuity plans?
- Is your organization ready with plans to deal with longer-term distractions based on a pandemic risk event?
However, in this fast-changing situation with several moving parts, the secret to staying strong is to adopt an agile approach to manage risk and work on business continuity.
To know more, check out our latest whitepapers on risk and compliance for in-depth and insightful information.