The following article offers guidance on how technology can help in demonstrating and managing reasonable steps within the Senior Manager & Certification Regime.
The application of the Senior Managers & Certification Regime should be seamless. For financial services companies, it should be, in principal, a natural part of a company’s ‘business as usual’ and organisational culture. In practice, however, the shock waves of personal accountability are just beginning to be felt and understood.
Much of the uncertainty and growing anxiety centres on the onus of interpreting what is ‘reasonable’ when a Senior Manager attempts to display that ‘reasonable steps’ have been taken to prevent or avoid the reoccurrence of a regulatory breach. Every day-to-day decision, action, delegation, escalation or inadvertent inaction might need explanation, justification or worse…investigation.
Will the “fingers crossed” approach work?
By the nature of the regime, there is a requirement for personal interpretation of what is reasonable. This means some Senior Manager’s may follow a more laissez-faire approach, while others could insist on documenting everything. Should they look to the organisation to provide a reasonable steps framework? Or should they continue to operate as they always have, hoping their approach will be adequate while secretly crossing their fingers under their desk?
With regards to personal accountability, the bottom line is that it all boils down to a Senior Manager’s own decision of what to do and how to interpret ‘reasonable’. This decision however, needs to occur without producing a huge and unsustainable administrative burden on the business and its support functions.
Despite widespread and sometimes conflicting views on the topic, one thing however is clear; as institutions already caught by the regime complete reflective reviews to identify areas for improvement, the topic of reasonable steps support is being flagged as a widespread area of concern. The more complex the organisation, the more acute the issue.
So, is the use of technology a reasonable step to solve this issue?
Unfortunately, there is no recipe to guarantee a perception of ‘reasonable’. The key is to adopt a structured approach and foster a culture of close and continuous management and improvement, contextualising and evidencing the discharge of a Senior Manager’s responsibilities. But as the complexity of managing an area of responsibility increases, so too does the risk to regime non-compliance, causing sleepless nights for many Senior Managers.
Unsurprisingly, many firms caught under the existing regime already apply some kind of technology, whether a patchwork of internal disparate systems or a set of complicated spreadsheets. These temporary fixes often come with copious amounts of manual effort. The productive return on effort and cost is low, with much of the existing man-hours and technology usage concentrated on the preparation and generation of the Statements of Responsibilities and Management Responsibilities Maps. Neither of which really begin to address and practically help a Senior Manager towards the demonstration of reasonable steps.
Of course, technology is not a cure on its own. Senior Managers can’t assume there is a shift of responsibility onto a system, but when set up and utilised correctly, the appropriate technology could well be of significant help in tackling the new epidemic of Senior Manager insomnia.
What integrated capabilities should a technology provide to aid the demonstration of reasonable steps?
Capability 1: A Single, integrated MI and reporting layer to support decision making
Most organisations have a wide range of various legacy systems that complete parts of the reasonable steps puzzle. Few have a single solution that aggregates the status of key measures, standardises how information is presented and pulls everything together, within and the regime framework, integrating with existing corporate governance and organisational structure.
Therefore, the first requirement is a technology solution that integrates with multiple data sources to provide a single, user-friendly presentation layer. This layer then supports a set of management information dashboards and reports that provide transparency on the status of prescribed responsibilities. Preferably, the MI layer fits the distinct organisational hierarchy across any legal entities, geographies, divisions or products, including matrix and multiple reporting lines. Displaying the organisational chart in the system can also help articulate reporting structures.
With this integrated and aggregated technology layer, a Senior Manager can bring multiple sources of comprehensive operational information together to support timely and informed decision-making. This is achieved by monitoring cross organisation risks in a single place, brought in from other systems and aligned to metrics and KRI’s or perhaps supplemented by enabling an additional assessment of risks not captured in an existing system.
In combination with overseeing progress of delegated actions or tasks, creating and maintaining action plans with clearly assigned owners and deadlines, capturing both the actual steps taken and alternative options for action, as well as monitoring the status of projects and programs brought in from underlying specialist project or portfolio management systems.
Ideally, the technology would also present an associate contextual commentary from their team, as things change or more clarity is necessary. Perhaps even capturing team challenges on various topics or registering a note of consideration of other demands on the team’s time. In addition to commentary, an ideal technology solution for reasonable steps should be able to capture meeting agendas and minutes across a variety of committees, forums or management meetings, to evidence what was discussed and allocate associated actions for ongoing tracking.
This MI capability could also provide the performance management of a Senior Manager’s specific business area, bringing even greater transparency and control. Combined with time-stamped actions, initiatives, risks, mitigations and commentary, this capability to store, archive and roll back the clock to an exact past date is vital to facilitate future interrogations, investigations and evidencing.
Capability 2: An ability to trigger actions
The ideal reasonable steps technology solution needs to provide an action allocation, control and governance capability, via intelligent workflow and business rules. It should prompt the Senior Manager to manually or automatically trigger actions, based on predefined rules. This enables the Senior Manager to ‘manage by exception’, focusing their attention on issues that need immediate brainpower and action. Such action triggering and workflow could also generate and distribute pre-configured reports, kick off specific escalation processes or provide an audit trail of how advice is sought from internal or external sources.
A key part of establishing business rules within the technology is exhibiting and evidencing the prioritisation logic combined with a description of the circumstances at the time. This prioritisation logic is critical as it is used to allocate resources, time and effort and the regulator will be keen to understand the rationale behind it. Pre-defined rules could also be supplemented with commentary associated to a specific decision point, to add further explanation.
The workflow capability should also automatically trigger a ‘lessons learnt’ process at the cessation of actions, initiatives, projects and programmes to aid organisational learning and inform internal audit. This capability could gather insights and perhaps even stimulate the creation of improvement plans, all of which are cultural improvement activities that reflect positively in the eyes of the regulator.
Capability 3: Support and smooth the handover and handoff processes
A single, integrated MI layer would also facilitate the transfer and handover process as Senior Managers change, enabling due diligence. The technology should also support the collection and storage of handover notes to provide additional context, perhaps linking to other documents or highlighting other sources of role and responsibility status information. These could include past comments from regulators, lists of associated regulations, team reports, reviews, memos or associated forums.
At the point of handover, responsibility status transparency provides the incoming Senior Manager with certainty and understanding about their new role, as well as articulates what the former Senior Manager actually knew about certain situations, whilst freezing and time stamping the extent of the out-going Senior Manager’s responsibilities. Combined with workflow either at the initial allocation of responsibilities or during handover, the technology should also provide the document management and facilitation of the iteration process, as responsibility ownership is discussed and amended.
The MI and workflow capabilities of a suitable technology would also be very useful to Senior Managers when managing responsibility handoffs to other internal departments, such as audit and compliance.
Taking one big step closer to a good night’s sleep
The list of capabilities above is part of the ‘wish list’ of what a technology should do to help Senior Managers evidence their reasonable steps on an on-going basis. Finally, to really secure a care free night of sleep on-going, a Senior Manager could all make sure the selected technology solution is:
- Configurable and adaptable over time as things change and regulations are updated. This is particularly important at the Certification layer of the regime, which will require a bespoke and adaptable design to fit your organisation’s unique set up. Perhaps even insist that the technology can be managed and configured by your own people, so you don’t become handcuffed to a vendor
- Able to dynamically produce regulatory documents like the Statement of Responsibilities (SoRs) or the Management Responsibilities Map (MRMs) from the data that sits in the system. This includes the version controlling for Management Responsibilities Maps with easy accessibility. Rather than having to manually produce these documents, which is painful and very time and resource consuming
- Adaptable from a look-and-feel perspective and easy to use and navigate, so that Senior Managers enjoy the experience. scalable and stable across enterprise category deployments, with proven performance management capabilities
And specifically, for reasonable steps evidencing, the technology ideally needs a proven heritage in performance management and is scalable and stable across enterprise category deployments.
Corporater is a flexible, configurable technology platform, that enables an organization to take immediate control across the Senior Managers and Certification Regime, including providing significant capabilities to help prove reasonable steps. Our solution enables active management of regime responsibilities through powerful workflow, collaboration and risk management capabilities, along with the ability to connect to other underlying HR, compliance, legal, risk or project and program management systems. (Of course, we can also provide everything mentioned in this article too!)
Learn more about Corporater Senior Managers and Certification Regime (SMCR) solution.
