How Compliance is Reacting to COVID-19 Crisis

    

As most employees are now working from home, without a doubt, compliance has become more challenging and regulators expect firms to be prepared to manage the risks and challenges promptly. Compliance Week has run a survey to understand how prepared were compliance professionals and organizations for the COVID-19 pandemic.

The survey found that 67% of compliance professionals are living with increased challenges since the beginning of the pandemic.

According to the survey, 46% of compliance professionals rated their compliance preparedness for the pandemic as good, 19% excellent, 27% moderate and 8% poor or very poor.   

Employees who stated their company readiness to face the pandemic as good or excellent, citing one of the reason to be that  “they started to prepare for it when the problem took place in China, in January”. Some companies were proactive and had a plan in place for disasters. In these cases, they only had to adapt the plan to the current situation, thus helping business continuity.

On the other hand, some companies weren’t prepared to let their employees work from home. The open responses in the survey shows that most of the problems were:

  • No adequate assets for employees to work from home, such as laptops and call forwarding. 
  • Disorganization and confusion among senior managers
  • No work-from-home policies and procedures
  • Addressing business concerns only, instead of considering employee concerns and fears

"Companies that had problems responding to the pandemic also reported communication issues, stemming from the company’s leaders having not adequately assessed its effect on their business and not having a fully formed plan."

We see communication as an essential part of the successful management of this pandemic. Creating a more open channel of communication with employees helps them to allay their fears and concerns during this uncertain period. In general, good communication makes a difference to crisis management and helps managers to address most of the current issues.

When asked about organizational disruption, most respondents mentioned operational challenges as an issue:

  • Disorganization in processes due to remote working 
  • Lack of regulatory guidance 
  • Supply Chain
  • Employee Health / Absenteeism
  • Cyber-security treats

Another highlight of the survey was how managers were dealing with ethical dilemmas, such as working parents being asked to come to the office or laying off employees. However, 27 percent of respondents said they didn’t have to face any ethical dilemmas.

Risks Facing Compliance

Companies are expected to protect and support their employee from being exposed to the virus. However, regulators also expect companies to meet their regulatory obligations and continuity of business effectively. Regulators want firms to assess all the operational risks and make sure all the measures are taken to service and support customers.

When employees work from home, activities that were previously monitored in the workplace are also expected to be monitored when working remotely. However, the survey results show that most firms aren’t providing full monitoring of these activities for employees working remotely. For instance, some firms had to stop their operations because of the lack of secure remote access to work systems.

Lessons learned

The biggest lesson learned from this survey is how important it is for firms to document how they are acting during this period and their efforts to meet regulatory requirements. There are always improvements to be made for future unexpected events and organizations that did not have a contingency plan or are struggling to operate during this time need to demonstrate their efforts to do so. 

In the future, we will see with more details the impact COVID-19 has had on compliance. Without a doubt, people will try to take advantage of uncertainty and regulators are aware of that. All regulated firms should be preparing for the impact of COVID-19 and ensure that all measures are implemented to minimize the risk of misconduct or business disruption during this event.

Check the latest guidelines and support measures from the main regulators around the world on the COVID-19 crisis. 

  • Central Bank of Ireland COVID-19 Hub
  • DFS - Department of Financial Services US
  • EBA – European Banking Authority 
  • ESMA - European Securities and Markets Authority
  • FCA - Financial Conduct Authority
  • FINRA - Financial Industry Regulatory Authority
  • HKMA - Hong Kong Monetary Authority
  • MAS - Monetary Authority of Singapore
  • SEC - Securities Exchange Commission

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