Optimising internal controls is a challenge for many financial firms. Yet, it’s becoming more and more of a focus as pressure increases from regulators and firms look to make services more resilient.
For the last year, we’ve been working on a project with the support of our members and McKinsey & Company, as a knowledge partner, to explore how we can help firms improve their control practice. This work resulted in the recent publication of the ORX Reference Control Library – an industry-first framework of the typical controls used across financial services.
As well as creating the ORX Reference Control Library, this project also helped us identify eight ways that firms can start to improve their controls practice.
How to improve your control practice
- Clearly define what a control is (or isn’t). Be precise on the scope of your control inventory.
- Prioritise key controls by ensuring they get the most resource and attention from management. Make sure this is embraced across the business, especially where the control is operated.
- Identify opportunities for control automation by focusing on where there is a specific business driver for this automation. This needs to be backed up by the right skills, tools and people.
- Consider automating your controls assurance process to drive objectivity, reduce manual effort, and report timely information.
- Develop a control library to support control standardisation and rationalisation. Ensure there is clear ownership of the controls, and where possible use industry control standards.
- Centralise your controls governance and sharing processes to support the effective and efficient operation of shared controls.
- Use indicators to monitor control optimisation activity.
- Implement a combined assurance plan to ensure coordinated and efficient monitoring and testing of controls across the three lines of defence.
Improve your control practice with the ORX Reference Control Library
Released in August 2022, the ORX Reference Control Library is a database of controls commonly in use across the financial services sector.
Containing over 750 controls, the library is aligned to the ORX Reference Taxonomy and is based on data and input from over 50 organisations. It’s available to members and non-members of ORX and can help you develop your own library from scratch or enhance your existing one.