Modernizing Compliance: Evolving From a Foundational Program to a Value-Creating Strategic Partner

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1 Modernizing Compliance: Evolving From a Foundational Program to a Value-Creating Strategic #CW2017

2 Moderator: Nicole Sandford Partner Deloitte & Touche Timothy Cercelle Managing Director Deloitte & Touche Pat Kelley Chief Compliance Officer, Corporate Compliance Prudential Financial Melissa Stephens VP, Government Compliance Officer #CW2017

3 Modernizing compliance: Evolving from a foundational program to a

4 Agenda Panelist introductions Background and catalysts to modernizing Modernization as a continuum Challenges to modernization Bottom line benefits of modernizing Q&A Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 4

5 Background and catalysts to modernizing the compliance function Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a valuecreating 5 strategic partner

6 The need to modernize Compliance and regulatory functions have an opportunity to better align with business strategy and respond to external opportunities/pressure in a drive toward efficiency/effectiveness Regulatory Technology (RegTech) Cognitive compliance; Risk sensing; Automation/Robotics; integrated (GRC) Big data and analytics Increased use of unstructured, high volume data to drive risk identification and process enhancement Lack of executive leadership buy-in Fragmented regulatory/ compliance change management Lack of compliance strategic vision Lack of clarity and engagement with first line of defense groups Resource/staffing challenges with significant manual processing Weak governance and oversight Ineffective coordination across multiple jurisdictions Disparate risk methodologies Ineffective interaction/ leverage of technology Internal challenges Emerging technologies Regulatory pressures Heightened standards and expectations given size and complexity of operations/services Increased regulatory examination and inspections Increased enforcement actions and/or fines and penalties New regulatory requirements Multiple regulator oversight Multiple jurisdictions with complex or conflicting laws/regulations Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 6

7 Open the app Go to Agenda Select this Session App brought to you #CW2017 Take the Poll

8 Polling question #1 Do you expect regulatory enforcement activity in your sector to change in the next 12 months? 1. Yes - Increase 2. No 3. Yes - Decrease Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 9

9 Why modernize? In considering the case to modernize - should your organization commit - the following outcomes may be achieved Transformative change: re-engineer core processes and automate the function to be more proactive and predictive; modern enterprises need top-of-the-house strategies and reliance models Flexibility: rapidly scale up or down depending on the nature of the compliance and/or business issue Increase to capacity: re-engineer traditional resource model and allocation methods and use deployment of technology, analytics, managed services, and offshore resources to achieve highest and best use of resources New competencies: compliance professionals are elevated to true business partners and advisors Potential cost reduction: cost reduction opportunities exist by creating efficiencies and seeking ways to be more effective with increased capacity across the organization through use of tools, technology and resource allocation Enterprise-wide view of risk and compliance: from predicting to sensing to acting and monitoring, the lines between these formerly separate realms are disappearing quickly Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 10

10 What does it mean to modernize? From value protection to value creation is a familiar claim. A demonstrated roadmap can make it a reality. 1 Elevated stature 2 Efficient 3 Effective 4 Proactive and predictive Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 11

11 How do you modernize? Suggested steps to take in determining the path to modernization Determine the desired modernized state for the compliance risk management program Prioritize areas that need to be addressed based on the results of the assessment, level of risk, and expected change to the organization Develop and update the compliance strategy; ensure it aligns to the company s overall strategy; determine appropriate measures of success Perform an assessment of the existing compliance program against the desired modernized state Develop and update the overall vision/ mission for compliance to align with desired modernized state Determine what levers (investments, initiatives, resources, tools, technology, etc.) are needed to achieve desired modernized state Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 12

organization s compliance function to drive toward modernization Compliance Program enablers People Process Technology

12 Compliance Risk Management Framework The end-to-end Compliance Risk Management Framework and related operating model has evolved to meet enhanced expectations, and sets a standard way to design, assess, implement, and continuously improve an organization s compliance function to drive toward modernization Compliance Program enablers People Process Technology Analytics Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 13

14 A look at the Compliance function maturity continuum Organizations have several choices: how advanced do they want their compliance functions to be, and what return do they expect for the investments it takes to get them there? Basic compliance Robotics and use of technology Talent management Predictive analytics Return on investment (ROI) and value creation Foundation Analytics Better integration More strategic Value creation Modernization Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 15

15 Polling question #2 How would you describe your organization s current level of modernization? 1. Foundational compliance team is focused on preventing and responding to risk, offering backward-looking analysis and reports, leveraging no analytics or RegTech tools 2. Modernized compliance team uses advanced analytics, and is involved/integrated in strategic decision-making 3. Value-creating compliance team is seen as a strategic advisor that offers predictive insights and greater efficiency through the use of RegTech Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 17

16 Levers to enable transformation and modernization Automation and enhancements should be considered within a broader ecosystem of people, process, technology, and analytics People Technology Process Analytics Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 18

17 Polling question #3 Which of the compliance levers offer the greatest opportunity to your company? 1. People 2. Process 3. Technology 4. Analytics 5. All of the above in equal parts Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 20

19 Polling question #4 What do you anticipate to be the biggest challenge to modernizing your organization s compliance function in the next 12 months? 1. Lack of board, C-suite, or business support 2. Lack of talent with the required skills 3. Lack of funding 4. Lack of analytics or technological capabilities 5. Managing change Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 23

20 Bottom line benefits of modernizing the Compliance function Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a valuecreating 24 strategic partner

21 Polling question #5 Which do you think would be the biggest benefit of modernizing your organization s compliance function in the next 12 months? 1. Reduction in fines, penalties, corrective actions, or legal costs due to earlier detection of possible compliance violations 2. Meaningful, often predictive, insights provided by compliance teams, in addition to backward-looking analysis and reports 3. Cultivation of a consistent, organization-wide ethical culture that makes compliance more of a built-in behavior 4. Improved efficiency of compliance function and reduced costs related to it 5. Better integration of regulatory and compliance concepts in business strategy Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a 26

22 This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation. Copyright 2017 Deloitte Development LLC. All rights reserved. Modernizing compliance: Evolving from a foundational program to a valuecreating 27 strategic partner

23 About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the Deloitte name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see to learn more about our global network of member firms. Copyright 2017 Deloitte Development LLC. All rights reserved. 36 USC

24 @ComplianceWeek #CW2017

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