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Role of Compliance Officer and Chief Risk Officer in the Insurance industry

VComply Editorial Team
Dec 16, 2022

A compliance officer in any organization across any industry ensures that the processes across your organization are transparent and compliant with all the industry regulations and guidelines. An insurance compliance officer is expected to stay up-to-date with all the changing rules and regulations and keep the organization updated to avoid lawsuits or legal complications. 

A compliance officer in any organization across any industry ensures that the processes across your organization are transparent and compliant with all the industry regulations and guidelines. An insurance compliance officer is expected to stay up-to-date with all the changing rules and regulations and keep the organization updated to avoid lawsuits or legal complications. 

On the other hand, a chief risk officer is responsible for assessing and mitigating threats to an enterprise’s capital and earnings. Threats can be competitive, regulator, and technological threats that a chief risk officer needs to identify and minimize proactively. 

Roles and responsibilities of a compliance officer 

  • Manage the compliance function in the organization
  • Evaluate every business activity and monitor if they are adhering to the industry norms
  • Work closely with regulatory bodies and external lawyers
  • Assess risks
  • Ability to provide solutions in case of compliance violations
  • Creating awareness among the staff about the importance of compliance and how to adhere to it

Know more about the  roles and responsibilities of a compliance manager 

Roles and responsibilities of the chief risk officer

  • Work closely with the governance director and play a critical role in monitoring, assessing, and mitigating risks on a day-to-day basis. 
  • Use various techniques to use historical simulation and best practices to quantify risks and mitigate them for the organization.
  • Manage open and transparent communication with the stakeholders regarding the risk profile of the organization. 
  • Help the organization to evaluate risks before supplying capital to various projects. 
  • Maintain a risk register to identify fraud schemes and applicable laws.
  •  Keep the policies and procedures updated, help spread awareness internally, and educate the employees on how to identify them. 
  • Assists in developing and monitoring mapped key risk indicators (KRIs).
  • Identifies emerging risks that may present new money laundering, fraud, and regulatory risks.

The threats to insurance organizations

  • An insurance company faces targeted breach attempts every year. 
  • It may take several months to detect a successful breach.
  • Internal security teams may not be able to discover successful breaches at all the time
  • Only a handful of organizations have proper cyber incident response protocols 

From the above arguments, it can be said that there is a significant disconnect between compliance needs, cybersecurity risks, and the insurers. 

Mid-sized companies are at a greater risk than large enterprises because they have fewer resources to ensure compliance. 

While large insurance companies have a dedicated IT department, mid-sized insurance companies often rely on a single compliance officer. 

Moreover, regulators now demand greater accountability and transparency from insurance companies. With that in place, CROs need to be strategic thinkers who can anticipate any risk-related disruptions that can influence one’s decision. Other risks that insurance companies are subjected to include: 

  • Credit risk
  • Data breach
  • Financial technology (FinTech) risk
  • Reputational risk
  • Market risk
  • Operational risk
  • Liquidity risk
  • Business risk
  • Systemic risk

A Chief Risk officer needs to address these risks by measuring the impact of the risks and coming up with solutions to mitigate them. The CROs also need to stay adept with the constant evolution of new technologies, digitization, and globalization. 

The growing role of the compliance officers

Although the role of a compliance officer in an insurance company is fairly young, there have been significant changes in recent years, especially with the constant change in the tech environment. Today, they have come a long way — from ticking a checklist on paper to using software and tools to keep up with proper documentation, regulations, and external influences. 

Continually changing regulations

The insurance industry always had been subjected to a lot of transformation in the rules and regulations that govern the industry. While traditionally, this information only needed to be sent to the management, several external bodies need this information. So the compliance officer must be adept with all the regulatory changes and guidelines to protect the organization from lawsuits or legal complications. 

A greater need for documentation

With the technology involved, there is a greater urgency to document everything an insurance company does. The digital systems help the insurance company to track and monitor all their compliance programs accurately. Moreover, when any governing authority asks for data, the compliance officer should know exactly where to find the data. 

 The growing role of risk officers

Today, an insurance risk officer has to focus on three risk areas. These are:

Strategic  risk management –anything that impacts the organization’s ability to execute its strategies

Operational risk management: this focuses on operations issues like labour unrest, technical problem, or vendor issues that can significantly impact the business 

Reputational risk management: any event that can impact the brand reputation.

Additional Resources- 7 steps to strategic risk management

4 Tips on how compliance and risk officers can manage their expanding roles

  1. Accountability lies with everyone

As the role and responsibility of compliance grow, one thing that everyone can do to help achieve compliance is to adhere to the compliance guidelines and stay accountable for their actions. You may also consider sharing responsibilities like one legal professional who know the finer points of the insurance law can support the compliance offer by issuing various compliance standards, policies, and regulations in the organization. Someone from the IT team can work with the audit team to access and decipher data. This person might stay accountable for general troubleshooting. 


2. Assess the current compliance status and take actions

Suppose you have joined an insurance company recently as a compliance officer. In that case, the first thing you need to do is, take a stalk of the current compliance situation of the company as soon as possible. For example, understand all information the company collects, store, and transmit. If your organization is transmitting data, ensure that your cloud storage solution has a backup plan and recovery capabilities. Also, ensure that your internal system is working in its optimal condition. 


3. Design a comprehensive compliance program

If you think the present compliance program is not at par with the industry requirement, create one that ticks off all the requirements of a compliance program. While doing so, seek guidance from relevant stakeholders and regulatory bodies. Consider various risks the business may face and how to mitigate them, and incorporate them into your plan. Consider cyber threats, too, while making the plan. If your organization is outsourcing services like payroll processing or cloud services, check with the auditing team to prepare a system and organization control schedule. 


4. Invest in a GRC solution 

If you are still managing your compliance on spreadsheets, consider investing in an integrated GRC solution like VComply. An integrated GRC software not just tracks and monitors your compliance issues but also keeps a tab on the organizational risks and mitigates them on time proactively. It also keeps track of the governance within the organization. A GRC solution has many benefits — you can automate the workflow, follow-ups, and reporting, so you don’t miss a deadline. It becomes a central point of truth with easy accessibility. The GRC tool promotes collaboration and holds everyone responsible for their respective roles in adhering to the GRC framework. 


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