Canadian Lawyer InHouse

27 CANADIANLAWYERMAG.COM/INHOUSE SEPTEMBER 2017 I f you're in the business of tracking compliance in the financial sector, knowing what your risks are day to day is critical. While the tradi - tional approach in the indus- try is to do an annual review of all possible regulatory risks, BMO Financial Group decided it was time to move to a more cur- rent practice. The project was led by Thomas Jones, managing director in BMO's compliance department. He oversees a global team — compliance testing and practices — with responsibility for running of the enterprise compliance program, which entails risk as - sessment, policy and procedure work and board reporting, as well as being the com- pliance testing centre of expertise, across BMO's lines of business. Under Jones' direction, BMO launched real-time compliance risk assessments in- stead of an annual "big bang" approach to the assessment process, where an organiza- tion would review all of its potential regula- tory risk at one time, which is typical for the industry. The result of introducing this system ef- fectively increased both efficiency of the pro- cess and accuracy of the assessment's results. "We took a fresh approach with real-time risk assessments through three different ways," says Jones. One way is based on trigger events, which could be a proposed new product the bank wants to launch that would cause an assess - ment of what risk does it pose to the orga- nization before launch. Launching a new product may change the regulatory risk of the business unit; this is accounted for in the real-time compliance risk assessments. The second way the process was re - vamped was through a standard control library and grouping similar risks together — if two regulatory risks are similar, the assessment is to document only once. This has proved highly effective, with the line of business documentation requirements re - duced by approximately 60 per cent. "That standardization gave us consis- tency and better accuracy across all of our different lines of business participating in the compliance risk assessment process," says Jones. The third way is the grouping of require - ments to make it more intuitive for the lines of business to understand the regulatory re- quirements applicable. "When you participate in an annual process, the number of hours it takes to go through that process is substantial," says Jones. "It's thousands of hours across all the different businesses. When you do a real- time, ongoing process based upon events, it spreads the work throughout the year and in aggregate actually reduces the time; and you have information every month and it doesn't go stale the month after you finish the exercise." With real-time assessments, "trigger events" such as changes in the business, external environment and/or controls lead directly to an update of the compliance risk assessments. The compliance risk assessment process is triggered by the "events" rather than waiting until an annual assessment, which can be months later. The results provide real-time information for management to act upon. With risk assessments conducted as need - ed throughout the year, the risk assessment process is more consistent, the information used to conduct the assessment is more rel- evant and the results are more accurate. Lastly, grouping of requirements into a balanced, intuitive level makes information understandable for the line of business and allows compliance to better calibrate similar risks across the bank. The new approach redefined compliance risk assessments, which are the cornerstone of BMO's Enterprise Compliance Program. Because it is real time, they can integrate the results with other parts of their program such as monitoring and testing and issues management. IH Category: Compliance Department size: Large Company: BMO Financial Group From 'big bang' to real-time compliance tracking By Jennifer Brown (left to right) Brian Lauzon, Tara Styles, Eric Moss, Robert Moher, Anthony Abbaterusso, Candace Seton-Rogers, Rosanna Sansalone, Allison McLeod, Rob Harland, Tom Jones, Scott Kerr, Hema Gothi, Greg Keeling, Karen So-Cheung. Missing from photo: Stanley Livingstone, Lisa Dorning, Michael Forlenza, Shannel Mangao, Sandra Sarudis, Karen Shuff, Wayne Kim, Daniel Yukilevich, Emily Tupy.

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