EY - Centralized operations: future of Risk, Control and Compliance

Centralized operations: the future of operating models for Risk, Control and Compliance

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In these times of continued global economic uncertainty, cost reduction and effective risk management remain key imperatives.

Organizations are required to manage a multitude of challenges:

  • Slow growth in mature markets
  • Challenges in realizing the full growth potential in emerging markets and managing the risk of operating in these markets
  • Commodity price volatility
  • The opportunities and threats of new technology and the digital age
  • The ever-changing and increasing burden of regulatory compliance

Not surprisingly, back-office functions such as HR, Finance and IT have been required to respond to this cost reduction agenda to ensure they deliver maximum value at minimum cost. One now-standard response has been the use of new, more centralized operating models in the shape of shared services, offshoring (to areas such as India, Eastern Europe and South America), and co-sourcing with and outsourcing to third-party providers.

The need to centralize and reduce the cost of back-office processes and transactions is the standard expectation across businesses today. Historically, Risk, Control and Compliance functions have been less willing to embrace these new, more centralized operating models.

However, leading organizations are challenging the status quo of their risk, control and compliance operating models; they are looking at ways in which they too can contribute to cost reduction while enhancing risk management controls and compliance practices.

We discuss what risk, control and compliance capabilities are being shifted into new centralized operating models (and which are not); and the challenges in making this transition:

Centralized operating models can support cost reduction initiatives, adapt to changing risk profiles, and provide real insight into the management of risks, controls and compliance needs globally and locally.

New centralized operating models represent a fundamental opportunity for Risk, Controls and Compliance functions to align with the rest of the business, manage risk more effectively and drive down cost.

Risk, Control and Compliance functions are increasingly asking “when and how” they make this move — not “if.”