Investing in an outsourced managed service may seem pretty overwhelming at first. After all, there is a lot to consider when it comes to trusting a company or individual outside of your organization with something as important as protecting your financial institution from risk.
The thing is, the risk of trying to take on such an important job within your company is likely to be far greater than those of hiring an outsourced service — assuming you do your due diligence when comparing options and choose a great provider.
When investing in risk management services, here are some of the unique values you can anticipate for your growing financial organization:
- Risk management services save you money.
- Risk management services give you access to a team of industry experts.
- Risk management services allow your organization to operate with agility.
- Risk management services allow your organization to uncover continuous improvement efforts.
Let’s dive into each of these benefits in more detail, and then we’ll discuss how you can ensure the company or individual you hire for the job will be a good fit.
4 Benefits of a Risk Management Service for Your Business
Before we get too far into all the benefits of risk management services, let’s define what outsourced risk management services are and what you can expect from providers. Outsourced risk management services are long-term and strategic partnerships between a provider and senior leadership at your bank. When banks utilize outsourced services such as these, they can mitigate enterprise risk and ensure compliance with governing bodies.
For example, when it comes to cybersecurity, a relationship with a well-structured risk management services provider allows you to build a framework that’s prevention-focused vs. reactive — thanks to their broad experience that helps them come up with innovative solutions.
Outsourcing to the right provider can bring you a significant amount of cost savings. When you partner with a provider like Compliance Core, you’ll be able to:
- Decrease development and operating costs
- Focus on your core competencies
- Leverage the innovations and best practices of the provider
- Scale your organization more easily
- Gain a foothold in the growing economy that lets your organization fuel global growth
- Get access to human capital
At Compliance Core, our philosophy and approach toward risk management involve:
- Assessing and planning for all key risks in your business activities and decisions
- Adopting an integrated approach that cuts across “silos” and provides an organization-wide view of risk
- Taking into consideration all upside opportunities and downside possibilities
- Establishing a shared context and language for risk management
- Allocating resources based on the priority of opportunities and threats
2. Industry Expertise
The industry expertise you gain when partnering with the right provider is invaluable, but partnering with the wrong provider can leave you unhappy and unsatisfied with the results. 30% of respondents in a recent survey conducted by Deloitte Consulting LLP stated that they were very dissatisfied with their outsourcing arrangement. Ensure you take the time to properly vet providers and ask them what kind of industry expertise they have.
When you partner with a provider like Compliance Core, we’ll be able to detect unforeseen risk and regulatory compliance issues that your stakeholders would likely miss. We act as a second set of eyes that operate outside of your organization’s day-to-day operations — giving you an “outsider perspective” that is crucial for detecting problems early.
3. Increased Agility
Your institution needs to be able to predict and respond to the ever-changing risk and regulatory compliance landscape you have to meet.
Regulatory compliance alone costs the banking industry nearly $270 billion annually, which is 10% of overall operating costs. The majority of this expense is because many of the biggest global banks have doubled their compliance and regulatory teams’ size.
With outsourced risk management services, you can enjoy the flexibility and scalability that providers offer through their service models and infrastructures. This means your organization will be able to react faster to changes in regulatory compliance mandates, as well as be more proactive and preventative when responding to risks.
4. Continuous Improvement
Risk management isn’t a one-and-done exercise. You can’t just spend a few weeks reviewing all your processes and systems with a fine-tooth comb and assume it’s going to be smooth sailing from there.
Risk management is a continuous process that you need to make a part of your day-to-day operations. Otherwise, you’ll always be stuck in reaction mode vs. preventative mode, which is more costly and detrimental to your business should you discover a serious problem too late.
A managed service provider, like Compliance Core, focuses on continuous improvement of operation and business processes — so you don’t have to. With risk management services, your organization gains:
- The ability to respond to change thanks to the flexible service models and scalable infrastructure
- The ability to solve complex problems within your organization thanks to continuous access to advisory expertise
- Access to market-leading technologies and platforms
For smaller financial firms such as community banks, risk management is of particular importance. A relatively small mistake could result in real loss and even failure, whereas the same mistake wouldn’t threaten a larger financial firm with a more diverse portfolio.
Smaller financial firms also face an increasingly complex set of regulatory compliance requirements covering anti-money laundering, fair lending, and consumer disclosures, to name a few, and they "feel the pain" of these requirements more than larger firms that can spread the costs more easily.
Sometimes smaller financial firms need more guidance to comply with the regulatory maze than larger financial firms. An outsourced risk management firm such as Compliance Core can provide this benefit.
Get Started With Compliance Core
Compliance Core offers scalable, data-driven, end-to-end compliance advisory services, and technology solutions to monitor and manage regulatory change and mitigate infractions. Our experience is rooted in our ability to provide managed services designed to simplify compliance while retaining efficiency and effectiveness.
Are you still unsure if outsourced risk management services are a good fit for your organization? Take our self-assessment to see how your company is performing against risk management and compliance best practices.