The role of requirements in effective regulatory risk management | Ascent

To effectively manage your regulatory risk, you must first understand what is required of your firm.

At Ascent, we believe that how your firm identifies its regulatory requirements (also known as “obligations”) can make or break your regulatory risk management and compliance program.

Here are five reasons why regulatory focus is so critical in identifying requirements and gaining a complete view of your unique risk exposure.

1) Requirements are foundational to managing regulatory risk

Identifying regulatory requirements is the first step in building a regulatory risk management and compliance program. Requirements dictate what regulatory risk drivers your firm monitors, and what policies, controls, and procedures it puts in place to manage them. For this reason, it’s critical to accurately pinpoint your firm’s exact requirements, as they impact your downstream compliance processes and ability to comply with the law. 

2) Missed requirements = regulatory risk blindspots

Unfortunately, the process of identifying requirements is difficult. Every day, compliance and legal teams navigate through oceans of regulatory texts to determine what is required of their business. Just the sheer volume of texts often leaves teams feeling like they’re drowning. This opens firms up to error as there is too much information to process and can result in teams overlooking requirements, especially as new regulation is introduced and existing texts are amended. To help your team rise above the tide, we believe that regulatory focus is key—help them focus only on what matters to the firm with the right tech solution.

3) Wrong requirements = inaccurate risk view

However, the rising regulatory tide isn’t the only hurdle that teams face. They also have to contend with regulatory depth. So while compliance and legal experts have the expertise to properly read regulation, their ability to scrutinize every important detail is hindered by the fact that they have to read through hundreds to thousands of pages of dense and complex texts. Without regulatory focus, your team could run the risk of overlooking a requirement, but—more importantly—of misidentifying a requirement as well.

4) Lack of regulatory focus clouds your risk view

While there are technology solutions that can help compliance and legal teams contend with regulatory volume, it’s important to understand how each vendor interprets and defines a “requirement” because not all create regulatory focus. In fact, most vendors consider requirements to be dense paragraphs of regulatory text or PDFs, which only clouds a firm’s regulatory focus as they require further analysis. This weighs heavy on compliance and legal teams who still need to comb through the text manually to determine what’s relevant to their business. At Ascent, we define regulatory requirements (or obligations) as the exact lines of regulation that apply to your business to help you better identify and manage your regulatory risk. 

5) Regulatory focus + clear risk view = better compliance

When regulatory requirements are identified properly, firms have a better understanding of their regulatory risk and can build stronger compliance and risk management programs. Once you know what your firm’s exact requirements are, you can create new or audit existing policies, controls, and procedures to ensure they address all areas of regulatory risk.

Manage Your Regulatory Risk 24/7 with Ascent

Ascent created Regulatory Knowledge Automation to dig deep into mountains of regulatory text and surface only the requirements / obligations relevant to your business. 

Developed, trained, and validated by our in-house team of data scientists and legal experts, our Regulatory Knowledge algorithms ingest, parse, and analyze millions of lines of regulatory text to pinpoint the exact lines of regulation that apply to your business.

Learn how Ascent’s regulatory focus enables an always-on view of your firm’s regulatory risk.

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