Cyber-Security, Comms Trump Text and Social for Compliance Officers

 
 
By Darryl K. Taft  |  Posted 2015-07-03
 
 
 
 
 
 
 
 
 
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    1 - Cyber-Security, Comms Trump Text and Social for Compliance Officers
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    Cyber-Security, Comms Trump Text and Social for Compliance Officers

    by Darryl K. Taft
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    2 - Social Networks Posed Challenges in the Past
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    Social Networks Posed Challenges in the Past

    The success of financial advisors can hinge on how effectively they communicate with clients. These conversations often take place outside the office and over channels other than email. For example, today's advisors reach clients through LinkedIn or Twitter, among other channels, and often from a mobile device. In the past, compliance officers approached new communications channels with trepidation. If compliance couldn't retain and review communication through a given channel, a customary practice of firms was to simply prohibit its use. For example, in 2011, just 39 percent of respondents allowed LinkedIn, compared with 72 percent today. As a result, compliance was often perceived as a barrier to marketing innovation.
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    3 - Compliance Is More Open to Communication Across Social Networks
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    Compliance Is More Open to Communication Across Social Networks

    The Smarsh survey shows that compliance officers have moved away from fearing the potential threat from digital channels. But the shift from fear to flexibility didn't happen overnight. Since the inception of this survey in 2011, compliance officers have been steadily moving from prohibition to permission. Since 2011, LinkedIn has the greatest increase in allowed usage, at 33 percent, closely followed by Twitter and, then, Facebook.
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    4 - Many Firms Don't Have Tech to Archive/Supervise Social Channels
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    Many Firms Don't Have Tech to Archive/Supervise Social Channels

    In 2011, only 17 percent of firms archived at least one network among LinkedIn, Facebook or Twitter. The next year, that grew to an average of 30 percent archiving at least one channel, and today, it's at 61 percent. While the growth in policy and enforcement technology is trending in the right direction, a compliance gap still remains. An average of 39 percent of respondents that allow social channels do not have an archiving/supervision solution in place for social media.
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    5 - BYOD at Mass Acceptance
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    BYOD at Mass Acceptance

    Social media isn't the only place where firms are becoming more flexible around advisor needs. This year, allowance of personal devices for business communications is up 17 percent from last year, and 73 percent of respondents have a policy about BYOD, compared with 58 percent last year.
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    6 - Text Messaging Gap Still Alarms
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    Text Messaging Gap Still Alarms

    Last year, survey responses indicated that the use of text messaging for business communications represented a significant compliance vulnerability. More than two-thirds of firms that allowed text messaging did not have a solution in place for retention and oversight, and unsurprisingly, nearly 60 percent of those that allowed text messaging had minimal or no confidence in their ability to produce messages if requested. The compliance gap—the number of firms that allow text messaging for business communications but don't have a system in place for retention/supervision—is still at an alarming 64 percent.
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    7 - Message Supervision Delivers Business Insight, Helps Identify Risk
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    Message Supervision Delivers Business Insight, Helps Identify Risk

    Electronic communications oversight is no longer just a checkbox need-to-have for compliance professionals. As electronic messaging channels have gained more prominence in business communications, firms are recognizing the value of this archived data, and message supervision presents a huge opportunity to identify risk within an organization. Seventy-two percent of respondents now believe message supervision is a critical tool to identify real risk in their organization, up 13 percent from last year, and 81 percent believe message supervision delivers valuable and actionable insights to the business, versus 65 percent last year.
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    8 - Requests for Data Production From the Archive
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    Requests for Data Production From the Archive

    Requests for data production from the archive are rising, and the reasons are growing. Outside of a regulatory audit, litigation and e-discovery, requests are the No. 1 reason digital communications data is leveraged, and 64 percent of respondents note that the compliance department is typically responsible for all noncompliance-related requests. Instances of seven or more such requests have risen by 16 percent since 2011.
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    9 - Cyber-Security Looms Large for Compliance Officers
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    Cyber-Security Looms Large for Compliance Officers

    Over the past year, as FINRA (Financial Industry Regulatory Authority) and the SEC both issued guidance on the need to address cyber-security risk and preparedness, compliance continued to evolve its role in helping companies prepare for threats and develop plans to deal with an attack. In the past year, 83 percent of respondents participated in conversations about risks related to cyber-security, and 58 percent expect their role to change as a result of managing such risks.
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    10 - Message Supervision Is More Proactive Today
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    Message Supervision Is More Proactive Today

    The shift in compliance professionals' top concerns shows that their message supervision is moving from being reactive to proactive. In 2015, as in 2011, new and changing regulations and increased scrutiny and enforcement by regulators remained among their top four concerns. But this year, balancing employee privacy considerations with oversight obligations and cyber-security threats posed by the use of electronic messaging platforms surfaced as top priorities.
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    11 - Compliance Officers Face Challenges When Asked to Produce Data
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    Compliance Officers Face Challenges When Asked to Produce Data

    The production of data upon request, including electronic communications, is an area of concern for regulators. The Smarsh survey uncovered factors interfering with firms' ability to produce electronic communications data within a reasonable time. The No. 1 problem is the multiplicity of platforms used to retain this data. Compliance officers often deal with multiple digital channels and often multiple solutions for archiving/supervision, and this complexity is compounded by a general lack of understanding of the technology and limited staff resources.
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    12 - Good Archiving Platforms Are Critical to Effective Compliance
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    Good Archiving Platforms Are Critical to Effective Compliance

    As compliance officers look to close the gaps with electronic communications, they may want to consider those attributes in an archiving solution that have been cited as "important to critically important" in developing a comprehensive electronic message compliance program. These include ease of use, support for new communication channels and having a single platform for searches across channels.
 

The convergence of compliance with IT and marketing initiatives is increasing, and message supervision is playing a greater role in corporate risk prevention, according to the findings of a recent survey from Smarsh, a data archiving and compliance company. Now in its fifth year, Smarsh's electronic communications compliance survey identifies the trends, concerns and best practices of compliance professionals in financial services related to the retention and oversight of electronic communications. Survey findings focused on the challenge of producing data during audits; allowing, tracking and archiving communications over electronic messaging platforms; and preparing for cyber-security incidents. Looking over the last five years, it is clear that the industry has evolved into seeing electronic communications data as an opportunity to spot trends, mitigate risk and advance business, rather than something to be locked down out of fear. Here's a look at the top takeaways from this year's survey.

 
 
 
 
 
 
 
 
 
 
 

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