Turning the Compliance Challenge into a Business Advantage

Turning the compliance challenge
into a business advantage
An Economist Intelligence Unit report sponsored by SAPPreface
Turning the compliance challenge into a business advantage is an Economist Intelligence Unit report sponsored by SAP. The Economist Intelligence Unit bears sole responsibility for this report. The Economist Intelligence Unit's editorial team conducted the interviews and wrote the report. The findings and views expressed in this report do not necessarily reflect the views of the sponsor. Dan Armstrong was the editor of the report. Richard Zoehrer was responsible for layout and design. Our thanks are due to the interviewees for their time and insights.
November 2007Turning the compliance challenge into a business advantage
Transparency as an advantage
rom the Health Insurance Portability Complexity and transparency and Accountability Act (HIPAA) in the US to the Solvency II framework in the EU, new rules F are adversaries-and insurance have spawned an army of consultants, vendors and is among the most complex industries solutions to address the "compliance" problem. But the current level of anxiety over compliance may in the worldbe short-sighted. In fact, the need to achieve the higher levels of transparency required by regulators may lead to business advantage. industry's opacity is also the reason intensified Complexity and transparency are adversaries-and compliance demands can be seen as an opportunity: insurance is among the most complex industries they provide the impetus to break through the in the world. Given the siloed, line-of-business territorial management of business units, with oriented structure of insurance operations and the accompanying reliance on multiple reporting the M&A-driven complexity of systems, insurance technologies, dependence on manual reconciliation companies do well to achieve translucence on an of stacks of spreadsheets and other disparate and enterprise level, let alone transparency. But the antiquated approaches.
The case of Securian Financial
arbanes-Oxley is one of three drivers desire for compliance, "you are also going to have (along with the need for enterprise risk a much better way of identifying exactly what is management and the move toward principle- contributing to your financials," he argues. "The bSased reserving), that is causing Minnesota-based news may be good or bad, but you will know exactly Securian Financial to achieve greater transparency where the accountability is-and that transparency and precision in its financials, according to Robert will be a business advantage." Reynolds, director of life product management According to Mr Reynolds, technology is the for the firm's Minnesota Life business unit. The enabler of both transparency and efficiency. He ability to view financial controls clearly and affirm says that Securian is finding many opportunities to that the right controls are in place is a significant automate, using vendor software and outsourcing, opportunity for the insurance industry, Mr Reynolds because technology-based tools are more available believes. While the immediate cause may be the than ever before. "Those solutions cut down the
© The Economist Intelligence Unit 2007 Turning the compliance challenge into a business advantage
absolute number of controls by eliminating manual Even deep within functional silos, such as in steps in the creation of financials, and that serves claims departments, the slow and manually driven both accuracy and efficiency," he says. "That gives recording of information and the reliance on batch you more control of what shapes your company's processing limits the ability of companies to respond reputation, and that in turn can only increase to ongoing changes. "If you're receiving paper consumer confidence." reports 15 to 45 days after the close of the quarter, Without that kind of control, the odds of a misstep you don't have the ability to manage in any fashion increase. Obviously insurance companies have other than reaction," observes Rob Schwartz, functioned over the years, even turning underwriting industry principal, SAP. "By the time you are aware profits. But as with the proverbial business of of the problem, the time to take corrective action sausage-making, while the result may be acceptable, may have passed and the damage is done."the process may be painful t... [download for more]