SEC Announces Creation of Office of Risk and Strategy


New Office of Risk and Strategy with OCIE

On March 8, 2016, the SEC issued press release 2016-38 announcing the creation of a new Office of Risk and Strategy with the Office of Compliance Inspections and Examinations (“OCIE”) and named Peter Driscoll as the SEC’s first Chief Risk and Strategy Officer.

A Risk-Based Data-Driven Mandate

According to the press release, “The Office of Risk and Strategy will lead our exam program’s risk-based, data-driven, and transparent approach to protecting investors.” A risk-based, data-driven focus is not new. What this new office represents is an evolution in the development and integration of data analytics in the SEC’s National Exam Program. On September 11, 2014 the SEC announced the creation of an Office of Risk Assessment within the Division of Economic and Risk Analysis. The description of this office in press release 2014-193 was very similar to the language in the most recent announcement.

Data Analytics

The SEC has been building their data analytic capabilities to identify issues that would be difficult to detect via manual methods. Data analytics also allow the SEC to cast a much wider net and examine more activity efficiently. This trend is not limited to our regulators. “Big Data” is a trend in many aspects of our lives as technology develops.

Compliance Implications

When performing an examination, regulators ask for much more data that just a few years ago. This data is generally produced in Excel spreadsheets and was analyzed by the exam staff. Now the data is sent to a central location for rigorous analysis and reports provided to the examiners. The compliance takeaway is if the regulators are examining your data in more detail, you should as well. Data analysis can yield the same advantages to compliance department of being able to detect activity and casting a wider net. Most large firms are already utilizing data analytics extensively but many small firms are lagging due to a lack of resources. It is common to hear small firms say, “I don’t have the money and I don’t have the time.” Consider most firms already have Excel and the point of data analytics is to create efficiency and save time.

Core Compliance Can Help

We can perform extensive testing for you, mentor your CCO on testing protocols and even assist with determining technology solutions. We also offer CORE TRAC, which is a module based compliance tracking and testing system. Contact us at (619) 278-0020 to find out more.

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