Many firms start planning their budgets in the fall, and the future of the economy is not promising. The difficulty may be larger for compliance departments that are already accustomed to dealing with resource limitations.
Companies will try to tighten their purse strings as the possibility of a recession looms. They will start by looking at the cost centers; believe it or not, many businesses still include compliance and legal in this category. Planned efforts will be delayed, and new projects may be shelved in order to protect jobs.
The requirement to stay current with technology is not suspended. Cryptocurrency, smart contracts, artificial intelligence (AI), and even the metaverse are examples of developing ideas that have the potential to have major compliance opportunities—and repercussions.
It is not an option to lag behind these advances. The stakes will be higher when it comes to investing on technical advancements since practitioners will be under pressure to achieve their demands within the restrictions of the economic environment.
According to Steve Naughton, head of regulatory compliance studies and clinical professor at Loyola University Chicago Law School,"In a situation like this, if you haven’t spent on a project and you’re about to pull the trigger—it’s been approved—you may have some second-guessing and double-checking on if there’s really a benefit to this." Throughout the 2008 financial crisis, Naughton worked for PepsiCo as the company's worldwide chief ethical and compliance officer. "In your position, you’re going to have to show there is a real benefit, both in the effectiveness of your compliance program and if this is going to help the company’s [return on investment] in some form."
Investing in a technological project necessitates a leap of faith in one form or another. Long-term gains may result from pausing to consider the benefits and hazards. Several recommended practices are included below for you to take into account as you proceed with installation.
1. Establish a roadmap
When deciding whether to invest in new technology, like with any project, starting without a clear goal and intended outcome in mind might sink the venture from the start.
According to Steve Chapman, chief customer officer of NAVEX, a provider of GRC software, "develop a list of core features and functionalities that are required to meet objectives—for instance, usability, budget, functionality, scalability, privacy, security, and more. From there, vendors should be evaluated and scored based on the key requirements they offer, naturally narrowing the scope of potential solutions."
There is no lack of tools; the key is choosing the one that best suits the requirements of your company. Of course, you must first define those needs and specify a timeframe for when you expect outcomes.
2. Understand the technology
It is one thing to decide to invest in a new technology like AI. It is more difficult to face its potential threats and capabilities.
According to Guy Pendell, a partner at the law firm CMS, "You often have people who are making these decisions at the front end because they are looking at the investment in their business, but they may not necessarily have the same degree of in-depth technical understanding of the technology to look at it from the risk and IT back-end perspective as well."
Pendell stated that he expects the demand for specialized compliance workers who are experts in particular technologies to increase. In a survey his company conducted earlier this year of legal and risk professionals, 69 percent of respondents said their organization would use technologies like AI more in the next three years despite the fact that half of respondents said using AI would result in risks and disputes that cannot be predicted at this time.
"Unless you really understand the technology—how it works, how the processes operate—it’s very difficult to properly assess risk and compliance issues, Pendell added.
Remember: A regulator can also ask you or a coworker to describe your technology. When an agency wants to make sure risks are handled effectively at your company, being unable to do so is not well accepted.
3. Establish milestones and early goals
Losing track of a project in the first year of execution might be expensive in the short and long terms since there is more pressure to keep under budget when the economy is uncertain. Setting up checkpoints early on might help you keep going.
According to Patricia McParland, director of product marketing at risk solutions supplier MetricStream, "Historically, those who have been successful started small, then expanded.Rather than enabling all business divisions at once or tackling all areas of risk and compliance, pick one or two, show success, and then expand. Focused, rolling goals will drive success along the way."
4. Brief your employees
The implementation of a new technology has an influence on more people than just decision-makers. When a firm experiences change, it also impacts its employees, many of whom may not be aware of how the changes would influence their ability to do their jobs.
"One of the big challenges organizations have when they go through particularly transformational changes in their use of technology is whether they’ve taken their employees and staff with them on that journey," according to Pendell. "There’s a lot of understandable anxiety around the adoption of new technology for staff. You might think, ‘Is my job still going to be intact in six months’ time?'"
According to Chapman, change management initiatives—which include a communication plan to transmit modifications being made—are essential to a successful implementation process.
The next step in onboarding and deployment, according to him, is a thorough training program that makes sure everyone engaged is well-informed about how the solution functions and how it satisfies business goals.
5. Maintain due diligence
The job does not finish with onboarding. Once a new technology is implemented, it is important to closely monitor its performance to make sure it is the best option.
Missed deadlines, misplaced expectations, or difficulties with tool adaptation among staff are warning signs to watch for, according to McParland. Any issues should be resolved, or it should be decided that the technology is not suitable.
Pendell continued, "Prepare to be caught off guard."
"There will be things coming out of the woodwork that perhaps people can’t even anticipate at the moment that may be quite specific to the systems and the environment they’re operating in, or there may be other issues in the use of this new technology that can’t be predicted." Pendell recommended compliance managers to review risk registers and procedures to make sure the technological areas crucial to the business are adequately addressed.
By fLEXI tEAM