• The Organization should perform an assessment of its business practices, infrastructure processes, organization governance and how technology interplays with both. This should then be bench marked against what is anticipated as an outcome of the Dodd-Frank bill.
• Tactical and Strategic initiatives should be prioritized, realistic time lines should be established and sufficient resources should be allocated. Note: these initiatives will distract senior management from every day business
What your priorities should be
• Consider a scalable infrastructure to efficiently retrieve granular data in any format for any audience.
• Build a formidable operational control framework. Ensure that key risk indicators are created and reliably reported to senior management.
• The SEC will be reviewing front to back procedures, ensure you have proper documentation.
• Technology without the proper process or process without the support of effective technology will expose the firm to capacity and data integration issues. Though straight through processing is difficult to attain, data quality can be achieved through a front to back systemic reconciliation process.
• Manual processes may present an operational risk in the eyes of the SEC. Any manual process, therefore, should have solid controls supporting them and sufficient documentation that the controls are in place.
• Regulators will be focusing on compliance and will be asking for the firm’s compliance manuals. Ensure that the organizations compliance manual is tailored and inclusive of all your business practices.
• Regulators will be searching for possible business conflicts with other firms or investors and conflicts within the enterprise. As an example, the risk manager should not report to the business.
• Ensure that your organization has a transparent allocation process. It should be properly documented and be able to be readily demonstrated.
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