Meeting compliance costs is a never-ending project for businesses. The Thompson Reuters 2017 Cost of Compliance report, stated 53% of global organisations expected their compliance budgets to moderately or significantly increase over the following 12 months. In addition, 60% believed the cost of their senior compliance staff would increase over the same period.
Reasons cited for this included:
Instruments such as the Markets in Financial Instruments Directive II (MiFID II) and the associated Regulation (MiFIR), the General Data Protection Regulations (GDPR and the California Consumer Privacy Act have significantly altered the regulatory landscape in 2018. And the latter two have made complying with regulatory requests even more complex, given that relevant personal data must be identified and removed prior to the information being delivered. All of this adds to an increase, not only in the budget requirements of legal and IT departments, but also the stress suffered by those required to meet increased regulatory demands in short time-scales with inadequate resources. Workplace stress is a serious threat to productivity and healthy bottom lines, as it is estimated to cost organisations in the US around $300 billion annually for health care and missed work days.
When a business thinks of eDiscovery, it usually associates it with preparation for potential litigation. However, responding to regulatory requests is now the number one reason organisations worldwide use eDiscovery. The motive is simple; eDiscovery tools provide the most accurate method of locating, collating, and searching large volumes of data in a short space of time. For example, if regulators are asking for a response to whether the management team provided guidance for fraud to be committed, eDiscovery systems can even detect emotions and sentiments which show precisely when the tone of communications started to change, and which individuals directed this variation. When starting an internal investigation to find out what really happened in your organization, such techniques can help you to identify exactly such communication or moments in time, The system can also uncover code names and euphemisms.
Outsourcing regulatory request work can become ludicrously expensive, very quickly. And this is no fault of the lawyers instructed on the project – often information is needed within a matter of days and given the need to review for privileged and protected information, final costs are difficult to predict. The other issue with outsourcing is that the people who know your business best, i.e. your employees, are removed from the process. It is unlikely an outside party would understand the context regarding your organisation’s operations, customers, and history. This lack of fundamental knowledge can have disastrous outcomes in situations where sensitive information is handed on to regulators who have the power to shut an organisation and/or issue a crippling fine.
Relying on existing in-house technology is also inadequate in most cases due to the sheer volume and complexity of data organisations now hold. Microsoft tools and Adobe cannot provide the efficiencies or depths required to redact accurate information in a swift manner. In addition, trying to collect and analyse data using a manual and/or piecemeal process can result in critical files being deleted. This can in turn lead to severe sanctions if a subsequent investigation is launched.
An eDiscovery platform is the most cost-effective way of not only redacting the data required in response to a regulatory request, but mitigating the risks of a formal investigation, reputational damage and/or a fine.
eDiscovery platforms can be purchased on subscription-based pricing structures, including per gigabyte. This is an ideal model as it means you only pay for what you use and when you use it.
Finally, and perhaps most importantly, having access to an in-house eDiscovery platform allows you to proactively identify compliance risks within your organisation. This is incredibly important for multi-nationals, who not only have offices in many countries, but must manage the compliance surrounding external agents and distributors. Being able to detect suspicions activity and/or non- compliance in advance of authorities will significantly reduce your exposure and risk to regulatory breaches.
To find out more about the advantages of in-house eDiscovery software and technology, you can download our white paper entitled “Efficiently Answering Regulatory Requests”.