From Compliance to Performance: Leading Practices from Wolters Kluwer Financial Services

Transcription

1 From Compliance to Performance: Leading Practices from Wolters Kluwer Financial Services June 2013

2 About Chartis Research Chartis is a leading provider of research and analysis covering the global market for risk management technology. Our goal is to support enterprises seeking to optimize business performance through better risk management, corporate governance and compliance. We help clients make informed technology and business decisions by providing in-depth analysis and actionable advice on the broad spectrum of risk technology offerings. Areas of expertise include: Credit risk Operational risk and Governance, Risk and Compliance (GRC) Market risk Asset and Liability Management (ALM) and Liquidity Risk Financial Crime Insurance risk Regulatory requirements including Basel 2, Basel 3, Dodd-Frank and Solvency 2 Chartis is solely focused on risk technology giving it significant advantage over generic market analysts. Chartis has brought together a leading team of analysts and advisors from the risk management and financial services industries. This team has hands-on experience of implementing and developing risk management systems and programs for Fortune 500 companies and leading consulting houses. Chartis Research is authorized and regulated in the United Kingdom by the Financial Conduct Authority (FCA) to provide investment advice. No part of this publication may be reproduced, adapted, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Chartis Research Ltd. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Chartis Research delivers will be based on information gathered in good faith, whose accuracy we cannot guarantee. Chartis Research accepts no liability whatever for actions taken based on any information that may subsequently prove to be incorrect or errors in our analysis. See Chartis Terms of Use on RiskTech100 is a Registered Trade Mark of Chartis Research Limited RiskTech Quadrant is a Registered Trade Mark of Chartis Research Limited Unauthorized use of Chartis Research s name and trademarks is strictly prohibited and subject to legal penalties 2

3 Table of Contents 1- Executive summary Survey demographics Key findings Regulatory pressures and risk management requirements Technology challenges and priorities Methods for managing and monitoring regulatory change Priorities and expenditure in Chartis Viewpoint Compliance challenges Going beyond regulatory requirements Using technology to move from compliance to performance Leading Practices from Wolters Kluwer Financial Services Case studies Final thoughts Further reading

4 List of Figures Figure 1: Getting the balance right...5 Figure 2: Job function of respondents...6 Figure 3: Primary business activity of respondents organizations...7 Figure 4: Size of organization by asset size...7 Figure 5: Location of organization...8 Figure 6: Concern regarding business risk and regulatory compliance...9 Figure 7: Ranking of concern for risk and compliance...10 Figure 8: Focus on specific regulatory and risk management concerns...10 Figure 9: Predicted regulatory pressures Figure 10: Risk challenges for organizations...12 Figure 11: Risk management obstacles...13 Figure 12: Which areas of compliance are considered challenging...14 Figure 13: Challenges in addressing regulatory change...15 Figure 14: Technology challenges for regulatory change...16 Figure 15: Technology spending priorities for Figure 16: Investments in technology Figure 17: Barriers to implementing a data system for risk and compliance...18 Figure 18: Methods to manage regulatory change...19 Figure 19: Sources for keeping up with regulatory changes...20 Figure 20: Risk and regulatory priorities for Figure 21: Risk and regulatory expenditure expectations for Figure 22: Finance, Risk, and Compliance framework...25 Figure 23: Wolters Kluwer risk, compliance, capital, and finance integration solution for liquidity risk

5 1- Executive summary In the aftermath of the financial crisis, financial institutions have been hit by a wave of new regulations and closer attention from supervisors. These regulations are more detailed and complex than their predecessors, requiring more data to be submitted at more regular intervals. This has greatly increased the compliance burden on financial institutions. Financial institutions are struggling to meet these requirements, as they have to put more and more resources into meeting regulators demands for compliance and information. Stricter regulations and closer supervision mean that regulators want firms to provide more evidence of compliance and to submit more information on their activities. While compliance is an important business goal, it should not be a primary goal. Performancerelated goals, such as profitability, return on equity, and customer satisfaction, need to take precedence. However, as a result of the increased focus on compliance, financial institutions are finding it hard to improve performance-related goals. In a difficult financial environment, firms are looking for options that will allow them to meet compliance requirements without costing too many resources and preventing them from improving risk management and performance. The goal for financial institutions should be to achieve the right balance between compliance and performance. Figure 1: Getting the balance right Competition Performance Compliance Regulation Cost reduction Business To understand the challenges that financial institutions are facing and how they are dealing with increased compliance requirements, Wolters Kluwer Financial Services commissioned Chartis Research to carry out a survey of risk, finance, and compliance professionals on this subject. The survey and analysis was carried out independently by Chartis. To supplement the quantitative results of this global survey, Chartis also carried out a number of in-depth phone interviews and face-to-face meetings with senior figures from financial institutions and consulting firms. This report covers the results of Chartis s survey and uses the results and interviews to explore the best methods for firms to balance compliance with performance. 5

6 2- Survey demographics To discover how financial institutions are adapting to the current wave of regulation, Chartis carried out a quantitative on-line survey of 86 practitioners working in financial institutions around the world. The research aims to see how risk and compliance management challenges are affecting different financial institutions depending on their size, location, and goals. Chartis s survey included respondents from a range of practices and functions within financial institutions, at a range of hierarchies. As Figure 2, below, shows, respondents came from a wide variety of roles, with the largest proportion coming from the group/enterprise risk function (21%), and compliance roles (16%). Respondents also included professionals from specific risk lines (market, credit, and operational), business lines, audit, and finance. Figure 2: Job function of respondents Treasury Technology & Systems Other Market risk management Fraud/Anti-Money Laundering/Financial Crime 3% 3% 3% 5% 5% Operational risk management Business Line CFO Credit risk management 7% 7% 8% 9% Internal Audit 12% Compliance 16% Group/Enterprise Risk Management/CRO 21% 0% 5% 10% 15% 20% 25% Respondents represented a range of organizations, most commonly coming from consumer/retail banks (22%) and universal banks (20%), as shown by Figure 3 below. Respondents organizations also included commercial banking, investment banks, and insurance and banking firms. There was also variety in the size of organizations, with the most common size being $1-9bn assets, while 16% were over $250bn, and 9% were under $500 million, as Figure 4 shows. 6

7 Figure 3: Primary business activity of respondents organizations Regulator/Central Bank 5% Other 8% Investment Banking/Asset Management Banking and Insurance (combined) 9% 9% Insurance 12% Corporate/Commercial banking 15% Universal Bank 20% Retail/consumer banking 22% 0% 5% 10% 15% 20% 25% Figure 4: Size of organization by asset size >$250bn 16% $100 - $249bn 8% $50 - $99bn 5% $25 - $49bn 11% $10 - $24bn 18% $1 - $9bn 28% $500m to 999m 5% <$500m 9% 0% 5% 10% 15% 20% 25% 30% 7

8 Most respondents represented organizations in North America (including Canada and Mexico) and Europe, with those two regions comprising 81% of the respondents responses, but organizations from Latin America, Africa, and APAC were also represented. Figure 5: Location of organization Middle East 3% APAC 4% South America 5% Africa 7% Europe 37% North America 44% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 8

9 3- Key findings The survey showed that compliance with regulations is a major factor for risk management in financial institutions. The survey shows that financial institutions are slightly more concerned with improving risk management, but that regulatory pressures are a major obstacle and create a number of challenging requirements and barriers to improved risk management. In particular, firms are concerned about the resources that they will have to dedicate to regulatory change management and the technology changes they will need to make. 3.1 Regulatory pressures and risk management requirements The results of the survey show that, while compliance and regulatory requirements are significant concerns, risk management is a higher priority for financial institutions. On a scale of 1-5, respondents indicated that both managing risk across all lines of business and managing compliance were significant concerns, but managing risk was slightly higher, as Figure 6 shows. Figure 7 shows the break-out of these results, showing that more respondents ranked compliance more highly than risk management. This reflects the findings of Chartis s follow-up, in-depth interviews for this report, which found that risk management was the leading driver of longterm projects, whilst compliance was driving short-term goals and priorities. Figure 6: Concern regarding business risk and regulatory compliance [1= not at all concerned, 5= very concerned] Manage compliance with the on-going regulation changes Manage risk across all lines of business

10 Figure 7: Ranking of concern for risk and compliance [1= not at all concerned, 5= very concerned] Manage risk across all lines of business Manage compliance with the ongoing regulation changes 1 0% 10% 20% 30% 40% 50% More specifically, credit risk management, financial crime risk management, and operational risk management are the top areas of focus, as Figure 8 shows. Regulatory concerns are still a strong focus, with Basel 3/CRD IV a significant area of focus for financial institutions. These results show that compliance and risk management are major concerns and will be competing for resources. Figure 8: Focus on specific regulatory and risk management concerns [1= no focus, 5= high degree of focus] Solvency 2 Dodd-Frank IFRS/IAS Basel 2 Basel 3/CRD 4 Market Risk Management ALM/Liquidity Risk Management Enterprise Risk Management Operational Risk Management Financial Crime/Anti-Money Laundering Credit Risk Management

11 Respondents in particular expect capital adequacy to be a leading source of regulatory pressure, as Figure 9 shows. Stress testing and internal risk models, which are also related to capital adequacy, were also considered to be likely areas of focus for the regulators. This reflects the key elements of Basel 3 and Dodd-Frank requirements. Preventing financial crime (both fraud and money-laundering) was also an expected source of regulatory pressure. Figure 9: Predicted regulatory pressures (select all that apply) Other 3% Market abuse Ensuring resilient technology systems are in place Remuneration RWA measurements 13% 18% 19% 23% Customer data protection Anti-Money Laundering Anti-fraud measures/customer protection 39% 43% 47% Internal risk models Stress testing 65% 66% Capital adequacy 86% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 11

12 Regulatory risk was considered to be the most significant risk management challenge for respondents, as Figure 10 shows, with IT, operational risk, and credit risk close behind. This shows that compliance is closely linked to risk management and regulatory requirements will constitute a challenge for risk functions. Figure 10: Risk challenges for organizations [1=not at all challenging, 5=very challenging] Solvency risk Vendor risk Liquidity risk Asset and liability management Financial risk Money Laundering Market risk Fraud Operational risk IT risk Credit risk Regulatory risk

13 Furthermore, respondents said regulatory pressures are the largest obstacle in risk management, as Figure 11 shows. A lack of integrated technology systems and a lack of data quality are also significant obstacles. This shows that many firms lack the technology systems required to handle increasing regulatory requirements and effectively manage risk at the same time. Figure 11: Risk management obstacles [1=not at all challenging, 5=very challenging] A corporate culture that does not support risk management The lack of a consistent, numbers-based scoring framework across all risk disciplines A lack of transparency into risk management decisions across the institution The development and maintenance of risk libraries Ineffective reporting methods A disconnect between risk management processes/programs and overall strategic plans Processes that do not empower employees to own and manage risk A lack of quality data, management, and analysis Too many technology systems that are not integrated Regulatory pressures

14 Respondents said the greatest compliance challenge was that increasingly complex regulations would create operational risk, as Figure 12 shows. Keeping staff informed was the other key challenge, as respondents listed providing accurate information to decision-makers, education and training, and getting data as the next most significant challenges. These results show that the complexity and opacity of regulations are making it difficult for firms to deal with them effectively and are creating an additional burden for staff. Figure 12: Which areas of compliance are considered challenging [1= not at all challenging, 5= very challenging] Scarcity of assets created by capital/liquidity/collateral requirements Complexity of capital/liquidity/collateral calculations Regulations are forcing firms to reduce resources dedicated to business goals Increased technology requirements of new regulations Reporting requirements are too frequent and too many in number Getting required data from across the organization Education/training of staff Providing decision-makers with accurate information about regulatory requirements Complexity and number of regulations creates additional, significant operational risk

15 Regulatory change will also create significant pressure on resources and profits, as Figure 13 shows. Costs, increasing the bottom line, and resource allocation were all considered to be major challenges for financial institutions in the light of regulatory change. This shows that firms are finding it difficult to balance performance with compliance. Figure 13: Challenges in addressing regulatory change [1= not at all challenging, 5= very challenging] Managing the various jurisdictions interpretations of regulations Controlling costs Increasing your organization s bottom line Allocating internal resources to manage regulatory change Technology challenges and priorities The need for flexible technology systems to adapt to changing regulations is the leading technology challenge surrounding compliance, followed closely by data quality, the cost of legacy systems, and the existence of silos. These results show that many traditional problems have not gone away and firms are still attempting to get the data right and integrate their systems. The results show that firms recognize the need for quality data and integration to manage regulatory requirements, while also showing that firms want to stay flexible to deal with ever-changing requirements. 15

16 Figure 14: Technology challenges for regulatory change [1= not at all challenging, 5= very challenging] Moving from batch to real-time processes for compliance IT infrastructure performance Integrating different systems, such as GRC Updating/upgrading analytics engines Regulatory and compliance reporting and dashboards Data management systems Risk/compliance/other systems currently exist in silos Existence of legacy systems that would be expensive to maintain/replace Ensuring data quality Ability of systems to adapt to changing regulations Respondents priorities for technology spending bolster this viewpoint. As Figure 15 shows, the most common priorities were upgrading existing systems, compliance, and risk management. As Figure 16 shows, the specific technology investments made by respondents were data management and integration projects. This shows firms recognize the need to upgrade their current systems, to break down silos, and to improve data quality to be able to handle regulatory requirements and the demands of risk management. Figure 15: Technology spending priorities for 2013 [1= lowest priority, 5= top priority] Creating an umbrella or enterprise-wide technology structure Treasury Financial crime/security Performance measurement/management Asset management (capital/collateral) Replacing non-compliant/defective technology Risk Management Compliance Upgrading existing systems

17 Figure 16: Investments in technology 2013 [1= lowest priority, 5= top priority] Big Data Analytics In-memory analytics (e.g. between risk and finance, or GRC and financial crime systems) Visualization and dashboard technologies Real-time monitoring systems Integration projects Data management systems

18 Figure 17 shows that firms see significant challenges to improving their data management systems. In particular, respondents believe that creating a unified data model and ensuring data consistency are challenges that will be difficult to overcome. This shows that firms are finding it hard to break down data silos and integrate their systems. Figure 17: Barriers to implementing a data system for risk and compliance Quality of external data sources Accessibility of external data sources (such as external loss databases) Regulatory data feeds Real-time data aggregation Increased data volume and database scalability Breaking down data silos Integrating unstructured data into systems Quality of internal data Cost of robust data systems Ensuring data consistency across the organization Creating a unified data model that can supply risk, compliance, and performance systems with necessary data

19 3.3 Methods for managing and monitoring regulatory change As Figure 18 illustrates, while some respondents use consultants, the most common solutions for managing regulatory change were developing in-house technology solutions (47%) or working with independent software companies (41%). Figure 18: Methods to manage regulatory change (select all that apply) Other/Not sure 19% We are working with an ISV and a consulting firm 30% We are working with a consulting firm 32% We are working with an independent software vendor(s) 41% In-house teams are developing new proprietary technology solutions 47% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 19

20 To stay up-to-date with regulatory changes, most respondents get information directly from the regulators (79%) or use an in-house team (68%), as Figure 19 shows. These results show that financial institutions aim to get regulatory information as quickly as possible and trying to rely mostly on internal sources of information and technology development. Figure 19: Sources for keeping up with regulatory changes (select all that apply) Law firm 21% Consulting company 23% Daily newspapers or news outlets 25% Third-party regulatory aggregator 34% In-house research/compliance team 68% Directly from the regulators 79% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 3.4 Priorities and expenditure in 2013 Respondents had a wide array of risk and regulatory goals for , with cutting costs, compliance, and capital management the top priorities, as Figure 20 shows. Figure 20: Risk and regulatory priorities for [1=lowest priority, 5=top priority] Financial crime Risk-adjusted performance management Integrating risk management across different risk factors/silos Liquidity management Integrating risk management with other disciplines Capital management Compliance Controlling/cutting costs

21 As Figure 21 shows, 74% of respondents predicted that expenditure on risk and regulation would increase, with 46% predicting an increase of between 10% and 25%, and 4% predicting an increase of over 50%. Figure 21: Risk and regulatory expenditure expectations for 2013 Increase in 2013 by over 50% 4% Increase in 2013 by over 25% 24% Increase in 2013 by over 10% 46% Remain the same as % Decrease in 2013 by over 10% 6% Decrease in 2013 by over 25% 1% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 21

22 4- Chartis viewpoint 4.1 Compliance challenges Financial institutions are dedicating a large proportion of their risk management and technology resources to compliance to deal with increasing amounts of regulation. The financial crisis, consequent recession, and subsequent operational failures and compliance scandals have led to stricter supervision of banking. As the results of the survey show, compliance and regulatory risk are pressing concerns for financial institutions, but they are struggling to balance compliance with the need to improve risk management. Financial institutions face a range of regulatory requirements, especially if they are active in more than one jurisdiction. It is not simply the number of rules that is causing firms problems. While deadlines are approaching swiftly, the decision-making process for finalizing the rules has often been slow and capricious. As the survey shows, firms believe they will need systems that are flexible and capable of changing to reflect alterations to the regulations. Financial institutions need to supply more data to numerous regulators more frequently. Some of the more complex capital management and liquidity risk management calculations require financial institutions to use a large amount of data in near to real time. Although many of the regulations cover similar areas, the data for each must be submitted in different formats. Due to their range and complexity, the new regulations also lack clarity. The inability of regulators to issue succinct instructions makes it difficult for financial institutions to ensure effective compliance, requiring them to dedicate considerable resources to compliance. As the respondents to our survey point out, this creates additional operational risk for financial institutions around compliance. Stricter supervision makes the operational risk, as well as reputational risk and regulatory risk, of failures much higher. Supervisors are more willing to issue steep fines to firms that fail to comply with rules, partly due to public pressure. Supervisors are also eager to conduct more detailed inspections of financial institutions controls. 4.2 Going beyond regulatory requirements However, firms know that meeting regulatory requirements will not be enough to meet their internal risk management requirements and to improve performance. Compliance is not always complementary to risk management and can even frustrate risk management goals. In particular, it is clear from Chartis s discussions with financial institutions that capital adequacy has become a key priority for many. However, firms should not confuse capital adequacy with risk management. While it can be a risk management tool, it only addresses the impact of the realization of risks; it fails to address the proactive, preventative side of risk management. Financial institutions need to balance compliance and reactive measures with proactive risk management. Allocating resources will be more difficult at a time when financial institutions face lower returns on equity and reduced budgets. Firms may feel that their priority should be to ensure their organization does not fall foul of regulations, but inadequate risk management should be of greater concern. Firms need to allow risk managers to manage risk, not fill out regulatory forms. To improve performance, firms need to pursue a strategy that provides greater links between risk and performance. Firms need to do more to manage their own problems, rather than the problems identified by the regulators. Firms need better risk management indicators, more integrated risk management, and to embed risk in the front office. Firms need to improve all three lines of defense to manage operational risk and improve performance. Links between risk and finance will help to produce risk-adjusted performance metrics. Taking these steps will also help firms to comply with regulatory requirements, especially as they will be useful evidence of a comprehensive risk program. 22

23 4.3 Using technology to move from compliance to performance For financial institutions to move from compliance to performance, they will need technology systems that allow them to achieve their goals. However, as respondents to our survey said cost-cutting would be a key goal and allocating resources for change management programs was difficult. Falling profits and the lingering effects of the crisis have forced firms to tighten their belts. In this environment, firms are looking for projects that can be implemented quickly and provide a pragmatic solution to an immediate problem. For risk and compliance, this means a platform for carrying out compliance on an enterprise scale and providing more effective risk management. To move from compliance to performance, firms need systems to enable the following capabilities: More efficient compliance Allowing compliance staff to carry out simple tasks more easily (for example by providing enterprise-wide data) will allow them to spend more time improving the quality of compliance controls and submissions and allow more time to be spent improving risk management. Implementing risk-adjusted returns on capital This will require integrating risk and finance to provide firms with a more accurate view of their position. This will help financial institutions to improve risk-adjusted returns on capital and encourage sustainable behavior. Integrating risk and finance will also help firms meet new capital management and liquidity risk requirements. Going beyond regulatory requirements Firms need to make risk management a competitive advantage by providing accurate risk information to the people who need it and providing the level of detail needed to meet internal enterprise risk management needs. To achieve these goals, firms will need their risk management and compliance systems to have the following functionalities: Data management For all risk management technology systems, it is crucial that the analytics are based on a sound data foundation. Integrating data from across the silos and improving data quality are the two most crucial goals. Integrating data will allow firms to manage compliance more effectively and to submit regulatory reports more easily. Improving data quality and reconciliation will reduce errors in regulatory figures and the risk of the bank basing decisions on faulty information. An integrated GRC platform for compliance Using enterprise data to create an enterprise GRC platform to manage compliance, controls, and to link compliance and risk functions will improve the speed and quality of compliance activities. Firms will have an enterprise-wide view of compliance needs and controls. Linking compliance to operational and enterprise risk will also help firms to be more efficient in managing risk and compliance. Integrated reporting systems Regulatory and internal reporting should be combined on an integrated reporting platform to enable firms to submit reports to regulators and supervisors more quickly, while providing dashboards that provide users with enterprise-wide information will give management the information required to make good decisions. Flexible analytics Financial institutions are aware that the final form of many regulations and market conditions remain in flux. Technology systems therefore need to be flexible to adapt to changing circumstances. Firms should be able to change and update analytics easily to respond to new instruments, market conditions, and regulatory requirements, preferably without requiring vendor assistance. User-configurable systems will be preferable to a one-size-fits-all approach and will provide long-term advantages. Integrated risk and finance systems In areas such as liquidity and capital, it is useful for risk and finance data to be used together to provide a more detailed and accurate picture of the bank s position. This will help to embed risk data throughout the organization, to enable more risk-based decision-making, and improve risk and compliance management. 23

24 5- Leading practices from Wolters Kluwer Financial Services Financial institutions today face a number of pressures, including increasing regulation and more stringent financial circumstances. These pressures are not going away and firms need technology systems that allow them to move beyond compliance and improve their performance. The results of Chartis s survey show firms want to focus on improving risk management, but that compliance requirements are absorbing too many resources and preventing them from reaching strategic business goals. In attempting to meet compliance requirements and risk management and performance goals, firms need to improve the efficiency of the processes around compliance, risk, and performance. This can be driven by improved technology systems. As the survey results show, firms need to solve the problems of siloed systems and poor quality data in order to improve performance. However, firms are under increasing cost pressures, making it difficult for IT teams to receive sufficient funding to re-model their systems. Moreover, firms are unwilling to invest in rigid systems the survey shows that flexibility and the ability to adapt to changing circumstances are prized by financial institutions. This is the most significant problem for financial institutions separate systems for risk, compliance, performance, and finance are inefficient and too expensive. In the current economic climate, they are an outdated approach that firms can ill-afford. Moreover, they make it difficult for financial institutions to achieve their goals by getting the right information to the right people and improving risk-adjusted performance. Separated systems also lead to data quality and reconciliation issues, creating further costs and additional operational risk. Financial institutions need improved integration of key technology systems. This will allow them to do more than just comply with regulations. While compliance is an important goal, technology architectures set up primarily to meet regulatory requirements will not enable effective risk management. Better automation of compliance and integration that allows for a portfolio-wide view of risk will enable risk managers to spend more time on risk management and improving performance. A portfolio-wide view of risk will help firms to manage risk better by giving them a clearer view of their situation. Achieving this and implementing integration will require a robust data management foundation. Chartis s survey showed that data management was a major concern for financial institutions and technology vendors need to help them solve the data problem to enable them to achieve strategic business goals. Wolters Kluwer Financial Services is a leading worldwide provider of finance, risk, compliance and audit technology solutions, and information and consulting services. With more than 30 offices in 20 countries, the company serves over 15,000 financial organizations all over the globe and has approximately 2,300 employees, including over 400 in-house compliance and risk management experts. It is part of Wolters Kluwer, a $4.7 billion company. Wolters Kluwer s Finance, Risk, and Compliance architecture is designed to help firms achieve these goals. Figure 22, below, demonstrates Wolters Kluwer s vision for this architecture, which currently exists as a framework to be worked towards. The aim is to bring risk management, compliance, finance, and performance together in a single architecture and has been supported by Wolters Kluwer s recent acquisitions. Wolters Kluwer aims to integrate its acquisitions into the architecture to provide financial institutions with better control and management of their financial data, and a clearer enterprise view and enhanced management of risk and performance. The diagram represents an ideal of how a risk, compliance, and performance architecture should work together. While no vendor (or bank) has this type of architecture yet, Chartis believes that this is a model that financial institutions should work towards. 24