Overall Concerns Remain High in Wolters Kluwer’s 2018 U.S. Regulatory and Risk Management Indicator Survey

Overall Concerns Remain High in Wolters Kluwer’s 2018 U.S. Regulatory and Risk Management Indicator Survey

Kluwer’s Compliance Solutions business
released the results of its
and Risk Management Indicator
survey for the U.S., showing a
Main Indicator Score of 85, representing continued anxiety on certain
risk and regulatory issues that demand close attention. However, there
is a notable easing in the anxiety levels of U.S. banks and credit
unions in managing their risk and regulatory compliance obligations as
compared to the 2017 survey results. This year’s Main Indicator Score of
85 represents an 18 percent decrease from the 2017 score.

Despite the recent passage of regulatory relief legislation (S. 2155) by
the U.S. Congress, 62 percent of respondents indicated they “do not
anticipate a likely reduction” in regulatory burden in the coming two

TheIndicatorsurvey was conducted nationwide between August 22
and September 12, 2018 and generated 582 responses.

“While we see a reduction in the Main Indicator Score, more than 60
percent of respondents continue to rate their compliance concerns as a
‘7 or higher’ on a 10-point scale. It is notable that risk management
concerns also remain fairly high, and there is palpable apprehension
about several top issues,including cybersecurity, IT risk and credit
risk that respondents indicated will receive escalated priority and
investment in the coming 12 months,” saidTimothy
R. Burniston
, Senior Advisor for Regulatory Strategy at Wolters
Kluwer Compliance Solutions.

The calculation of the Main Indicator Score is based on several factors,
including the number of new federal regulations, number of enforcement
actions, and the total dollar amount of fines imposed on banks and
credit unions over the past 12 months, and additional information
provided by survey respondents. Burniston attributed the lower overall
score to notable drops in regulations, enforcement actions and fines,
particularly the number of new federal regulations issued during the
2018 survey period compared to the prior year.

“The reductions in these environmental factors influenced the final
score considerably,” noted Burniston. “But persistently high levels of
concern shown in six years of conducting this survey reinforces the
recognition that compliance with rules and regulations is still very
much part of an ever-evolving risk management landscape that continues
to challenge institutions.”

Over the next 12 months, the surveyed institutions said they are most
likely to make “moderate to high” investments in updating policies and
procedures (78 percent), strengthening risk assessment and controls (77
percent), and training their staff, board of directors and senior
management (75 percent) as priorities. The responses indicate a
continuing concern about compliance risk management in general and point
to the specific areas regulators are likely to scrutinize.

Respondents from all of the market segments surveyed—including banks,
credit unions, and savings & loans—consistently citedmanaging
changing regulations
as a top concern. Of specific regulatory
compliance challenges, complying with the loomingCurrent
Expected Credit Loss (CECL) impairment standard
was identified as
the top issue, with 73 percent “very or somewhat concerned.” This was
followed byfair
(61 percent), UDAAP (60 percent) and state-issued regulatory
requirements (58 percent). Additionally, managingHome
Mortgage Disclosure Act
(HMDA) obligations and implementingTILA
RESPA Integrated Disclosure (TRID)
regulations continue to be among
the top compliance challenges cited. Forty-three percent of the
respondents indicated they have seen a slight or considerable increase
in examiners’ scrutiny of their fair lending programs, a level
consistent with priorIndicatorfindings.

Staff and investment resourcing continued to be pressure points, with
respondents citing inadequate staffing for compliance (44 percent),
manual compliance processes (42 percent), and too many competing
business priorities (42 percent) as top obstacles to implementing an
effective compliance program.

This year saw a slight uptick in concerns around accurately capturing
additional data fields for HMDA rules (62 percent), upgrading systems
(39 percent), and analyzing data fields (21 percent) when compared to
2017 levels. However, institutions’ total time and costs invested in
HMDA implementations and staff training dropped from the prior year,
from 41 to 33 percent, which was expected.

Wolters Kluwer Compliance Solutions, part of the company’s Governance,
Risk & Compliance division, is a market leader and trusted provider of
regulatory compliance solutions and services to more than 2,000 U.S.
banks and credit unions. The business helps these financial institutions
efficiently manage compliance obligations tied to loan and deposit
origination transactions and workflows, and gain the insights needed to
focus on better serving their customers and growing their business.

About Wolters Kluwer Governance, Risk & Compliance
Risk & Compliance (GRC) is a division ofWolters
, which provides legal and banking professionals with
solutions to ensure compliance with ever-changing regulatory and legal
obligations, manage risk, increase efficiency, and produce better
business outcomes. GRC offers a portfolio of technology-enabled expert
services and solutions focused on legal entity compliance, legal
operations management, banking product compliance, and banking
regulatory compliance.

Wolters Kluwer (AEX: WKL) is a global leader in information services and
solutions for professionals in the health, tax and accounting, risk and
compliance, finance and legal sectors. Wolters Kluwer reported 2017
annual revenues of €4.4 billion. Wolters Kluwer, headquartered in Alphen
aan den Rijn, the Netherlands, serves customers in over 180 countries,
maintains operations in over 40 countries and employs 19,000 people

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