Why Covid-19 Is the Ultimate Test for Sustainability and Innovation in Compliance

The following was contributed by Lisa Walker, Head of Compliance UK & Middle East at ING

A new compliance challenges

The UN penned the start of 2020 as “the decade of delivery” – with just 10 years to go to achieve an ambitious global effort to deliver the 2030 promise. However, as we are all acutely aware, the start of 2020 did not go as planned…

We have now been working from home for over 3 months and counting. Employees around the world are trying to be productive and manage their roles from remote locations. As compliance professionals there are new challenges we must react to and mitigate against. According to Deloitte Investigations team, fraud risks typically rise during times of crisis, amid increased pressures and weakened internal controls.

Finding the opportunity

The pandemic might have paused our momentum towards a “decade of delivery” and impacted our abilities as compliance professionals to undertake monitoring and oversight activities in the usual ways. However, where there is a challenge, there is also opportunity. I am pleased to see how we’re starting to adjust as an industry- from the rising prevalence of e-signatures to the encouragement of digital product applications which support effective remote working and surveillance of those activities.

Aside from these new challenges and ways of working, our role is critical, and I am certain we can come out of this with a refreshed approach and new ways of thinking. We are at a crossroads, but the crisis represents a watershed moment for compliance teams globally.  As we start to move forward again, we have an opportunity to make changes and make things better.

At ING we want to play our part by financing a social and green recovery that creates jobs, speeds up growth and builds more resilient societies. Our efforts to help with the immediate relief from the coronavirus impact should coincide with efforts to address these ongoing challenges and build back better.

ESG principles have risen to the top of the agenda for financial services, and in my opinion, this should be welcomed by the compliance function and industry. This is a chance to re-prioritise future sustainability both for the customer and the world in which we all live. ESG principles also serve as a chance to boost the resilience of the financial system more widely.

While environmental, social and governance disclosures are becoming common practice among companies across all industries, it is also important to address the regulatory compliance risks associated with inaccurate disclosures or failure to disclose at all – the compliance function will play an increasingly critical role in this.

ESG performance has not been historically linked to regulatory compliance, but Covid-19 has provided an excellent opportunity to better entwine these two streams. Regulators are increasingly focusing on the role of ESG disclosures to drive effective governance and stewardship of regulated firms. The unforeseen nature of Covid has added a further dimension to the way view certain risks.. Businesses can apply these lessons and build learnings into their operational controls and risk assessments.

The future compliance team

In my view there will likely be no return to the working world we operated within before Covid-19 and digital transformation will play a pivotal role in helping to shape these new ways of working.

Technology has always formed an important part of regulation and compliance – it provides potential and the ability to drive progress. Since the start of my career I have seen a shift towards adoption of technology to support Compliance activities and the rise of RegTech. The current crisis is a big step change, prompting a seismic shift towards technology with no room for laggards in a post pandemic financial landscape.

So where do compliance teams fit into all of this? The crisis represents a golden opportunity to connect innovation and ESG principles and root this in our working practices. We have a core role to play in ensuring that ESG disclosures are accurate and complete, while balancing risk and business success. It won’t always be simple, but it’s important and a role that I’m determined to take on.

The views represented in this commentary are those of its author and do not reflect the opinion of Traders Magazine, Markets Media Group or its staff. Traders Magazine welcomes reader feedback on this column and on all issues relevant to the institutional trading community.