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Finance, Risks, Compliance
Data & Sustainability

Banking and insurance institutions are facing major challenges at industrializing their external and internal reporting processes that increase in numbers and become more granular. Indeed, new ESG regulations will foster these trends within Finance Departments.

Finance Departments transformation inevitably implies the use of new technologies that aim to:

• Automate existing processes as much as possible (forecast management, regulatory reporting, data sourcing, etc.) to embrace these new challenges, specifically regarding non-financial communication
• Rationalize implementation and running costs associated with each process by regularly challenging its internal and/or external value creation 
• Make better use of available data and optimize institution’s performance management while monitoring the associated risks (together with Executive Management, Risk Department, Compliance and Business Lines)

In an environment of rising uncertainty and complexity, an efficient and predictive risk management framework must be implemented to prevent the organization against risk occurrence that would outreach its risk appetite. This involves three main challenges:  

• Ability to understand risks: today’s risks are not tomorrow’s risks, the question is “what can go wrong?”. Risk mapping must be constantly enriched, whether the risks are IT (IS/ cloud/ cybersecurity/ Fintech,including resilience, e.g. DORA), ESG or data (EU GDPR, PSD2, etc.) related.
• Ability to assess and quantify risks: Risks must be assessed based on frequency and severity criteria. Therefore, a methodology for predictive risk analysis must be developed, that involves the update of occurrence and severity scenarios.
• Framework proportionality: the risk framework must be proportionate to meet the on-going objective of reducing risk monitoring costs. The consistency of the organization (top-down but also bottom-up approach with business lines) must also be reassessed with regard to the risk itself, the framework deployed as well as the change in the environment (new business, new products, regulatory requirements, fine or formal notice received from a control authority, etc.).

• Mastering the art of risk mapping and its operational maintenance
• Integrating new risks into the risk scenarios and mapping
• Moving from permanent control to predictive risk management
• Reducing the cost of risk management
• Auditing deployed frameworks and identifying optimization levers
• Training and raising awareness of organizations for risk culture and governance

Beyond regulatory challenges, Compliance Departments must refine their positioning and provide added value to the business lines via a threefold role:

• Be a Partner: support business lines in the implementation of regulatory programs or the optimization of compliance risk management frameworks, while maximizing the efficiency of business lines operational processes
• Be a Supplier: optimize the compliance risk management framework (risk assessment and control environment) by fully taking over their role as a second line of defense
• Be a Watchtower: Increase organization’s oversight quality through the implementation and monitoring of key indicators allowing for appropriate reporting to Executive Management

Ailancy has the capacity to support you throughout the broad compliance value chain, from the framing and definition of the target state to its operational implementation.

Historically owned by the CSR departments, transparency, credibility, and voluntary commitments towards sustainability now involve the mobilization of Finance, Risk and Compliance functions:

• Finance functions are responsible for setting up or adapting entity’s reporting standards and regulations changes (CSDR, Pillar 3) and optimizing financial and non-financial reporting processes
• Authorities formally demand risk functions to integrate, within risk governance and monitoring framework, the full scope of ESG risks as a whole (broader than climate-related risks) with an impact on all controls
• As part of the implementation of the Sustainable Finance regulation (MiFID II / DDA ESG, SFDR, Taxonomy), Compliance functions are responsible for ensuring the compliance of the frameworks but also the consistency with voluntary commitments

Our expert teams will assist you in building credible approaches towards sustainability in order to increase positive impact and prevent greenwashing risks associated with these projects.