The way risk technology changes the way we work and live is very interesting when you look at how technology is adopted. There is a cycle that can be seen whenever there is new technology available for personal or business use. In the first step of the cycle, the tech is just being used by a few people. Slowly, the tech is adopted for professional uses by some government agencies and by the biggest enterprises who can afford experimental technology. Slowly the technology becomes cheaper to implement and then goes mainstream.
What is really interesting is how technology’s role and use changes once it enters the mainstream. When everyone can use technology, we see a change in the way people and businesses operate. Instead of the old processes being carried out with new technology, we see the emergence of new processes that are far more efficient than anything that was available before the tech went mainstream.
The Technology Adoption Cycle
The technology adoption cycle we are seeing happen in the domains of risk and compliance right now has been seen multiple times in other technologies. Let’s look at email and how it slowly entered the mainstream. In the beginning, emails were only being used by universities, government agencies, and selected organizations who could afford the hardware.
Slowly the hardware and networking requirements became cheaper to procure, which resulted in more businesses implement the infrastructure required to enable emails.
However, until this point, emails were just an option and a lot of work was still being done through faxes and letters. This meant that all the old processes were still in place – they were just faster.
The real revolution in communication came about once the email was mainstream and anyone could create a free email account. Businesses suddenly realized that they could replace – not provide an alternative but fully replace – a lot of fax and letter communication with emails. Businesses processes, which were previously designed with the limitations of fax and letter in mind, were now completely reengineered.
There was a very simple reason behind this reengineering – processes that took days because of slow communication could now be handled instantly.
Slowly, all business processes were updated in light of the new tech that was available.
Risk and Compliance Technology
Risk and compliance technology, both referred to as Regtech or Fintech (Regulatory technology / Financial technology), are following the same technology adoption cycle. Fintech solutions were initially designed for use in government agencies and then were being used by some of the largest financial organizations in the world.
These organizations spent millions of dollars on developing bespoke solutions for risk management and compliance management. Now we are at the stage where risk and compliance tech is entering the mainstream.
This entry into the mainstream is being fueled by the advent of cloud-based risk and compliance solutions. Contrary to on-site solutions which required millions of dollars to implement and manage, cloud solutions can deliver equivalent performance at a fraction of the cost. The cloud infrastructure makes both implementation and maintenance much easier while also increasing the usefulness of the solution.
This means that we are at the precipice of the final stage of technology adoption. Until this point, most businesses were using risk and compliance technology wherever they could. Now the goals for all businesses will be different because every business can easily procure the technology at very affordable rates. We will now see businesses rethinking their whole approach to risk and compliance in light of the newly available technology and rework the way we do business.
New Responsibilities and Capabilities
If we change the way we handle risk and compliance, what does that mean for risk and compliance teams? The biggest difference that we can expect is a remarkable decrease in the amount of administrative work that risk and compliance teams need to do.
Most people think that the risk and compliance team swift through data to ensure that everything is alright. This is only half true – the reality is that risk and compliance teams spend most of their time getting the data they need ready for analysis. They must go through hundreds of documents and spreadsheets and then create documents and spreadsheets for their own reporting.
Risk and compliance technology automate most of these administrative tasks. Basically, we can expect risk and compliance teams to suddenly have a lot of free time. This would result in them being able to increase the scope of their responsibilities.
Instead of working hard at fixing little issues, they will be able to focus on the big picture and bring about structural improvements in the way an organization handles risk and compliance management. Risk and compliance professionals should look into how risk and compliance tech use data and make sure they have the skills required to operate such solutions.