This article attempts to provide a broad outlook of various aspects that should be considered before an organization try to outsource the burden of regulatory compliance activities requiring helps of experts and outside service providers.
1. Do you think that the management of risk and compliance is becoming increasingly complicated?.
2. Does the compliance function requires more skills, experience, and knowledge than ever before – especially with the growing regulatory complexity that compliance teams need to understand and navigate ?
3. Does the increased compliances needs the importance of having capable specialists managing the function on behalf of your organization, which places even greater pressure upon the recruitment and retention of these sought-after resources ?
4. Do you feel similar organizations like you are also looking to outsource certain aspects of their compliance workload – turning to third-party suppliers for support ?
5. Has the compliance grown tougher to manage ?
6. Has the compliance solution market evolved in response, with new services and tools designed to help your organization ?
7. Do you think that bringing in external help alleviates the compliance pressure so that you can quickly plug any gaps to build a fully resourced, blended team – rather than relying on an over-stretched team, which may lack key skills ?
8. Do you think that apart from relieving pressure on your internal team, outsourcing compliance can also save you cost of operations ?
9. Do you think that due to economies of scale and a clear operational focus the outsourcing can offer a very competitive rate ?
10. Have you identified whether outsourcing can also provide you with much quicker access to more sophisticated systems – such as compliance analytics – that you would otherwise have to pay for or develop in-house ?
11. Have you identified the outsourcing partner’s responsibility to stay on top of all the latest regulations and rule changes, freeing up your own staff to concentrate on key compliance projects or remediation activities ?
12. For your internal teams, can it be comforting to know that external expertise is immediately available should it be required.
13. Whether it is useful if the outsourcing is proactively recommending improvements and sharing best practices to the compliance operation based on its exposure to many other clients and its visibility into what is working for them.
14. Before outsourcing have you identified the fear of the potential loss of control of risk management ?
15. Have you identified that the ultimate accountability for non-compliance will always remain with your organisation ?
16. Have you identified that the service provider may deliver to your expectations and result in more than just poor service, as any subsequent fines will only compound the financial impact of your partner’s sub-par performance.
17. Have you ensured that all the right governance structures, KPIs, shared systems, and communication frameworks are in place between you and service provider ?
18. Have you identified the likely resistance from your internal compliance team & their fears etc. before outsourcing job to service provider ?
19. Have you bring your in-house specialists on board and make them clear that their role is not under threat ?
20 Have you discussed and initiate a process that looks at where a third party can complement existing skills and alleviate pressure and where activities should certainly be retained ?
21. Has the service provider properly understand your business and your compliance obligations ?
22. Is there any transactional activities that can legitimately be centralized and run by a third party without being an industry expert ?
23. Is the outsourcing compliance has the potential to present data-security risks against the sensitive information that could become accessible to people outside your organization ?
24. Have you made arrangements to ensure that the third-party compliance provider takes all the necessary steps to protect the security of your data ?
25. Have you made contracts thereby ensuring that the appropriate delegation of responsibilities specifically mandates that particular activities, reporting, and other obligations (for example, data-transfer agreements) are agreed upon – therefore appointing your provider as a legitimate data processor ?
To sum up, the compliance activities must be kept in-house due to organization strategies, policies, or internal beliefs. But in exceptional circumstances that outsourcing helps to manage the increasing burden of compliance. The compliance solutions market has evolved in response to rising demand, with more suppliers in the sector than ever before and new services and tools becoming available all the time.
Establishing successful outsourcing is not an easy process. However, by initiating a process that looks at which compliance activities to outsource and which to keep in-house – and carefully considering the pros and cons in each case – you can achieve a balanced in-house/outsourced model that is right for your organization.
Hope the above article serves useful purpose.
SHABIR SHAKIR, B.COM, CA (Inter)