In the world of financial institutions, policy is the backbone of operations. It defines compliance strategy and standards, guides behavior, and defines how business should be conducted.
But like any other crucial element of an organization, policy is not static. It evolves and changes in response to the shifting landscape of regulatory norms, institutional goals, and market dynamics. As a compliance professional, it's essential to know when it's time for a policy tune-up.
A well-maintained policy is up-to-date, relevant, clear, and effective. Here are eight signs that your policy might need a review and update:
Regulatory environments and business needs evolve continually. If your policy hasn't been reviewed or updated in the last year, it's time for a tune-up.
This can lead to confusion and inconsistent practices. A unified, updated policy is key for smooth operations and compliance.
Regularly integrate addendums into your policy to ensure its coherence and accuracy.
These can undermine the credibility of your policy and cause misunderstanding.
Related: 6 Essentials for Flawless Policy Management
Update these to reflect the current structure and roles within your organization.
Update this to reflect the areas currently served, removing those that are no longer served and adding new areas served.
An updated policy should reflect the current offerings of your institution.
Ensure your policy is compliant with the latest regulations to avoid legal and reputational risks.
Out-of-date policies can be symptomatic of deeper organizational issues that require your attention. Regular audits and testing can reveal gaps between policy and practice to help you recognize if a policy needs to be updated or whether staff needs to re-dedicate themselves to policy enforcement.
For example, if your policy says one thing but employees are doing something else, there’s a chance that your policy may not be practical or is being ignored. This finding highlights the need for policy review, staff training, or both.
An audit might uncover increasing numbers of policy exceptions. Frequent exceptions can indicate a policy that's too rigid or out of touch with business realities. Audits and testing might also find that policy limits are breached without accountability. This could signify a lack of awareness or disregard for the policy, emphasizing the need for improved communication, enforcement, and potentially policy revision.
As a compliance professional, recognizing these signs is the first step in ensuring your financial institution's policy is robust, relevant, and effective. A policy tune-up is not just an act of maintenance, but an opportunity to drive improvement, mitigate risk, and support your organization's strategic goals.
Remember: An up-to-date policy is a powerful tool for fostering compliant, efficient, and successful operations.
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