Compliance and Risk Factors, Regulatory Environment Drive Sharp
Increase
Wolters
Kluwer Financial Services’ new U.S. Insurance Regulatory and Risk Management
Indicator reveals that overall levels of concern for compliance and risk within
the industry have risen sharply. In the report released today, the main
Indicator score rose to 146 from its baseline of 100 established in October
2013.
The report’s key findings include:
- Sixty-four percent
of respondents indicated a concern with the ability to maintain compliance with
changing regulations, while 60% are worried about their ability to keep track of
those changes. Fifty-seven percent of respondents were concerned with their
ability to demonstrate compliance to regulators.
- When asked to
describe the top concerns for their organization over the next 12 months,
respondents most commonly cited “keeping up with the constant regulatory and
requirement changes” and “implementing all the different requirements.” Pointing
to mounting worries over the ability to manage performance alongside risk and
compliance, another of the most common burdens noted was “maintaining growth and
profitability in the current regulatory environment.”
- When indicating
the “top risks” facing organizations, 54% of respondents selected regulatory
risk. Thirty-seven percent selected operational risk and 33% chose market risk
as a top risk. While virtually all of the respondents indicated their
organization has undertaken some risk management efforts, many were in the early
stages. Twenty percent understand and manage risks, but they do not yet have a
formal process in place or they have a process in place but not an overall risk
program.
- The survey also revealed that organizations face many
obstacles when looking to manage risk at the enterprise level. Thirty-two
percent of respondents indicated the top obstacle is the “wide range of
technology systems that are not well integrated.” In addition, 21% indicated the
“disconnect between risk management processes and strategic plans” is an
obstacle. Other top impediments included the lack of “a consistent numbers-based
scoring framework,” “transparency into risk management decisions,” “processes
that empower employees,” and “quality data, management, and analysis.” Each of
these factors was selected as a top obstacle by 17% of survey participants.
“Our Indicator highlights the significant obstacles insurers continue
to face in both applying resources and establishing processes needed for a
comprehensive approach to managing their greatest risk challenges as we get
closer to ORSA implementation,” said
Pam Ewing, general manager of Wolters Kluwer Financial Services’ Insurance
Compliance Solutions. “We expect to see an even greater increase in the
challenges organizations face as processes and programs are tested in the coming
months.”
The company surveyed over 300 financial institutions to derive
an “Indicator,” which measures ten critical factors facing the U.S. insurance
industry. Seven factors are derived from direct input from life, health and
property and casualty insurers on their top compliance and risk management
concerns. The remaining three factors are based on regulatory data the company
compiles, including number of affected citations, number of new enforcement
actions/penalties, and value of the fines levied during the quarter
measured.
Follow the link for a full copy of the Insurance
Regulatory and Risk Indicator Report. Wolters Kluwer Financial Services also
released its U.S. Banking
Indicator earlier this month, which highlights similar, mounting pressures
for banks.
About Wolters Kluwer Financial Services
Wolters
Kluwer Financial Services provides more than 15,000 customers worldwide with
risk management, compliance, finance and audit solutions that help them
successfully navigate regulatory complexity, optimize risk and financial
performance, and manage data to support critical decisions. With more than 30
offices in 20 countries, our prominent brands include: AppOne®, ARC Logics®, Bankers Systems®, Capital
Changes, CASH
Suite™, FRSGlobal, FinArch, GainsKeeper®, NILS®, TeamMate®, Uniform Forms™, VMP®
Mortgage Solutions and Wiz®.
Wolters Kluwer Financial Services is part of Wolters Kluwer, which
had 2013 annual revenues of €3.6 billion ($4.7 billion), employs 19,000
employees worldwide, and maintains operations in over 40 countries across
Europe, North America, Asia Pacific, and Latin America. Wolters Kluwer is
headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on
Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100
indices.