5 Best Practices to Prepare for Your Next FI Regulatory Exam
Regulatory exams are a part of life for risk management professionals in the financial world.
These exams help show regulatory bodies that your FI is well-prepared and protected from fraud, cyber threats, and more. How you prepare for your next exam can have a significant impact on the future of your financial institution.
Being prepared for these exams is more important, and possibly more difficult, than ever before. 72% of executives say the U.S. regulatory environment poses a moderate or serious risk to their business.
Regulatory exams can cover a lot of ground: capital, asset quality, earnings, liquidity, vendor risk management, IT compliance, and more. Unfavorable findings from a regulatory exam can bring about fines, a damaged reputation, more scrutiny over business practices, and in some cases a requirement to cease operation. So it’s imperative to be prepared for your next exam.
Let’s discuss some best practices to help you prepare for your next regulatory exam.
5 best practices for satisfying the requirements of your next regulatory exam
Staying exam-ready involves a few key steps:
1. Know your vendors
Simply knowing who all of your vendors are will give you a leg up.
Who you work with can open you up to risk, so you should regularly check with vendors to ensure compliance. We recommend setting up a thorough vendor due diligence program to keep track of your partners.
Build a comprehensive list of third-party vendors in a central location. It can be helpful to schedule a recurring calendar invite to update this list and the accompanying onboarding documentation for each third-party vendor.
Using regulatory compliance risk management software will help you stay up-to-date with the latest changes and track your compliance regularly.
2. Practice, practice, practice
In addition to training employees and equipping them with any information they’d need to be prepared for exams, you should conduct practice exams at your FI. This will help ensure that everyone is familiar with the process of regulatory exams. When the time does come, your team will be aligned on what to expect. It can be a major help to have a plan in place and for everyone to know their role when an exam is approaching.
3. Partner with experts, advisors, and auditors
Nobody is better positioned to help you and your FI prepare for exams than those most familiar with them. Consider working with experts, advisors, auditors, and consultants specializing in regulatory exams and financial institutions who can help you be as prepared as possible for your exams.
Proactively engaging with experts is a great way to stay exam-ready. Asking for advice or clarification can show initiative and help you mold your risk program to better adhere to the latest guidance.
WolfPAC can help connect you to the expertise you need to bolster your risk management program. Our comprehensive software and white-glove services have been developed with the help of more than 300 Wolf & Co. consultants, auditors, and experts in the field.
4. Emphasize consistent employee training
Risk management professionals should strive to develop a culture that naturally helps their staff avoid risk and stay compliant. Investing in training infrastructure is one of the best lines of defense in your risk mitigation strategy.
Build a formal training program that includes the major tenets of a strong risk management strategy: staying up-to-date on exam procedures, business continuity training, phishing training, and so on. Focus on reinforcing best practices around data security, customer protection, and fraud prevention.
5. Invest in risk management software
Give yourself the best chance at identifying gaps – before a regulatory exam might highlight them – by keeping all of your internal responsibilities, documentation, and standards in one centralized place. You can use an integrated risk management platform for FIs to assist with this task.
Unlike manual risk assessments on spreadsheets, leading risk management software uses automation to help notify you when your assessments are out of date, communicate upcoming regulatory changes, and assess potential risks at scale.
Creating a culture of preparedness
When it comes down to it, the best way to ensure your business and its employees are ready for the next regulatory exam is to create a culture of preparedness. This means conducting internal risk assessments, staying organized, examining vendors, conducting practice exams, and working with experts.
These tasks might seem daunting, but once part of your company culture, they will level up your regulatory exam process.
Looking for a software and solutions partner to help elevate your FI’s risk management program? Join the more than 6,000 users who already use the WolfPAC Integrated Risk Management software to do just that. Request a demo today to see how you can be more prepared than ever for your next regulatory exam.