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WHAT ARE THE GOVERNANCE, RISK AND COMPLIANCE TRENDS SET TO SHAPE 2018?

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WHAT ARE THE GOVERNANCE, RISK AND COMPLIANCE TRENDS SET TO SHAPE 2018?

Doug Morgan, Group Chief Executive, Cordium

The past few years have been challenging times for the compliance teams of financial firms and 2018 will be no different – if anything, the pace of evolution is set to accelerate on a number of fronts.

From input gathered from clients and other industry contacts, Cordium has pulled together a list of the ten trends that investment firms should be most focused on in 2018 and beyond. In no particular order, these are:

  • Don’t assume MiFID II is done and dusted: The deadline for MiFIDII compliance may have passed, but this package of EU regulation will continue to have a significant impact during 2018. While it appears many firms missed the initial deadline and extensions have been granted in some markets, we expect firms will need to continue to fix and update the programs they’ve implemented. There is also a high likelihood of a sequel to MiFID II, focused on addressing elements found to be problematic during implementation.
  • Prepare yourself for increased risk and capital rules: EU and HongKong-based investment firms will need to start implementing new frameworks designed to improve the way they manage risk. In particular, firms regulated by the Hong Kong Securities & Futures Commission now have to implement a new Fund Manager Code of Conduct, which will come into force in November 2018. EU firms are facing an even more significant set of changes with the implementation of a new prudential capital framework for investment managers. New rules could be in effect from as early as 2019.
  • Check your conduct: Regulators will increase their focus on monitoring the behaviour of individuals within financial firms through structured frameworks that hold individuals more accountable for their decisions and actions. For example, UK investment firms will need to prepare for a new senior managers and certification regime, expected to come into force in mid-to-late 2019. In Hong Kong, a similar regime was published in December 2016 requiring firms to submit their management structure and comply by April 16, 2018.
  • Be prepared for increased vigilance around market abuse: Regulators will continue to put real priority on stamping out market abuse and insider trading. For example, it’s likely the SEC in the US will issue some form of guidance around material non-public information (MNPI) during 2018, which will require firms to implement more specific policies and procedures. In Europe, there will be an increased focus placed on using the data generated by MiFID II’s transaction reporting – estimated at more than one trillion data points each year – to tackle market abuse.
  • Brace yourself for Brexit: Firms should be planning now for the UK’s EU withdrawal in March 2019, creating operational strategies which can be implemented depending on the specific outcome of the negotiations. They need to closely examine a range of factors, including where current and future revenue streams will come from and how their supply chain might be impacted by any potential deal. It’s important to allocate senior management and board time to these issues and for the firm to engage with key external stakeholders. Firms need to plan during 2018 to ensure they are not only positioned to continue business as usual but also to prosper despite what Brexit brings.
  • Prepare for increased regulatory scrutiny: The sheer volume of rulemaking in the wake of the financial crisis – which occurred a decade ago – has been tremendous. With these rules mostly now in place, regulators will focus on ensuring they are being properly adhered to. For example, the SEC has invested heavily in analytics and requested additional data from firms through regulatory filings, such as the recently amended Form ADV. Regulators are actively using this information to better understand the overall industry environment and to target firms with issues more selectively.
  • Create comprehensive cybersecurity processes: Cybersecurity will remain one of the most aggressive areas of regulatory evolution in 2018. Across the globe, governments and regulators are scrambling to implement new rules and improve existing frameworks for the management of the cybersecurity risk of financial firms. All firms will need to be able to evidence the specifics of their cybersecurity programs to regulators.
  • Prepare for a clampdown on cryptocurrencies: Regulators have begun to state clearly how they will regulate the financial products and markets associated with cryptocurrencies. Their focus on this sector will continue to increase as firms look for safe ways to incorporate cryptocurrencies into their investment strategies. While monitoring the rapidly evolving regulatory activity in this space, all firms investing in cryptocurrencies need to be prepared to answer questions about risks, such as secure custody, and how they’re addressing existing compliance requirements.
  • Embrace FinTech and RegTech: Firms need to keep up on developments in this space to better understand how technology can help them comply with regulations in more cost-effective ways. Many firms are already considering document-tracking solutions to ensure the firms’ compliance practices match their stated policies and to evidence these processes to regulators.
  • Reduce your reputational risk: Increased regulation creates the potential for greater reputational damage, so compliance teams need to think more strategically about how to mitigate this risk. This could involve regular reviews by a Chief Information Security Officer (CISO) to ensure data is adequately controlled and protected, providing a document solution to track compliance policy adherence and process completion, or installing a solution that captures MNPI from employees more effectively.

Reflecting a new normal, 2018 will bring new challenges for compliance and technology teams at investment firms. By taking fresh approaches to the methods used to achieve compliance and aligning programs with their firms’ growth strategies, compliance teams can be more confident in confronting the changes which the new year brings.

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How can businesses celebrate Halloween virtually?

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How can businesses celebrate Halloween virtually? 1

Bring the spooky season to life by virtually gathering the team for fun activities during October. Even though this year’s celebrations will look a bit different, don’t let the restrictions of remote working stop the fun. Plan a virtual Halloween party and lead up to it with spooky but socially distanced activities to build suspense.

  1. Host a virtual halloween party

The Halloween tradition of a spooky soiree should definitely be on the cards for your remote team. Flesh out a part of your team’s schedule near the 31st October for some creepy fun.

Consider those devilish details, pre-arrange your party activities to avoid any deathly silences (and even more terrifying, ghosting!) at your event. Take inspiration from our virtual Halloween celebration ideas to make it the best virtual halloween party ever.

  1. Organise a murder mystery game

Has anyone on your remote team been acting suspiciously on Slack lately? A virtual murder mystery game could get to the bottom of the matter.

After selecting a theme, designate a host and have them secretly select a perpetrator before writing up clues for the rest of the team. Have the team follow a virtual scavenger hunt of hints before making their grand accusations at the virtual Halloween party.

To delve even deeper into the murder mystery, have the host create characters for each team member with big personalities to match!

  1. Host a costume competition

It wouldn’t be Halloween without a costume competition, complete with a prize for the most impressive outfit. Whilst there are some foolproof classic Halloween options like ghosts, witches, pirates and vampires, drawing new ideas from our current moment can yield some hilarious results.

  1. Collaborate on a spooky party playlist

Sure, Spotify has a whole host of spooky playlists (this one called Spooky is a fine example), but it’s much more fun to create a new one as a team.

From the Monster Mash to Rhianna’s Disturbia to Van Halen’s Running with the Devil, feed in the funky favourites ready for the virtual dance floor.

  1. Challenge your team to a virtual pumpkin carving competition 

A low-cost way to ignite some creativity in your team, set a challenge to create the best Jack-O-Lantern with a prize for the most frightening result.

There are no fancy tools required to carve your first pumpkin. Check out some pumpkin carving tutorials to get you started and remember, safety first, advise your team to go slow if it’s their first time experimenting with this special Halloween skill.

  1. Get creative with your virtual backgrounds

Host your morning check-in in an eerie forest. Catch up for your one-on-one (1:1) in an abandoned fairground. Hold your all-staff meetings while being chased by zombies.

The spine-tingling opportunities are endless when you’re using video chat and Google images.

Getting started with one-on-one (1:1s)? Download our Ultimate Guide to Running 1:1s  to help you get the most out of your meetings.

  1. Stream a Halloween movie together

Hosting a team movie watching party can be an amazing way to bond through the shared experience of terror. Set a time and date to tune in together then have a full debrief at your team catch-up the next morning.

Choose a movie that’s easy to find; classics are always a good option (and tend not to be too terrifying) – try Alien, The Birds or Jaws.

Alternatively, you can stream it all together using Netflix Party.

  1. Start a horror book club

A spooky novel can also be a fun way to engage with your team that can last over several weeks. Horror is one of the all-time great book club themes and experiencing a terrifying novel with others can stop you from going down a spooky rabbit hole alone.

Assign a host of the club and get them to ask the group questions about the books scariest moments and most terrifying themes. Sharing any spooky facts about the book can also give your book club an edge. For example, did you know that the idea of Dracula came to author Bram Stoker in a wild nightmare that was suspected to have been caused by bad seafood?

Have lots of book lovers at your workplace? Start a virtual book club and keep the book club tradition going throughout the entire year!

Employment Hero, one of Australia’s fastest-growing tech companies

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Five key challenges CIOs in insurance will face over the next 12 months

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Five key challenges CIOs in insurance will face over the next 12 months 2

By Andrew Jenkins, Principal in the CIO & Technology Officers Practice at Odgers Berndtson, discusses five challenges CIOs will face as the world emerges into the new normal.

Even before the pandemic, CIOs in insurance had their hands full. Many insurance companies – which have historically been digital laggards – were increasingly embarking on ventures to embed customer-focused products, integrate disparate systems and data structures, and use technology to implement organisational redesign. Now, with companies six months into the pandemic, these programmes have become that much harder to implement and a number of new hurdles have emerged that technology leaders will also have to overcome. These are five of the key challenges CIOs in the insurance industry will face over the next 12 months:

1.) Implementing Agile transformation in a remote environment

Pre-pandemic, Agile transformation – the process of adapting the values, principles and practices of an organisation so that it can react rapidly to change – had been gaining traction among insurers. This was particularly true of those that saw the benefits it could bring in driving a customer-oriented approach to product development. However, Agile relies on teams physically co-locating together and using the power of shared knowledge and rapid communication. With the UK and other countries shifting in and out of lockdowns, CIOs will face an uphill battle when trying to introduce Agile programmes among entirely remote workforces. At the very least it will require the implementation of technology that can enable the same sort of collaborative environment a physical office provides.

2.) Changing the cultural mindset about the customer journey.

Insurance is a very commoditised industry and has historically focused on digital transformation to drive cost efficiency – the aim being to provide the most competitive premiums. However, market share is increasingly being consumed by firms that are investing in their approach to customer engagement and using technology to transform the end-to-end customer journey. For the leadership teams of many insurers this might seem like an unorthodox approach to digital transformation. CIOs will therefore need to work hard to bring their fellow executives round to the idea that digital innovation for the customer is more profitable than digital innovation to reduce back-end costs – it’s a cultural mindset shift that will also need to permeate through the organisation if the CIO wants to truly transform the approach to customer engagement.

3.) Adapting the business model to make greater use of public and private cloud platforms

Using cloud platforms – whether that is working with a cloud provider or investing in a private platform – can improve the speed to market for new products, enhance the claims experience for customers and help firms expand globally. There are now insurers that have built leading policy, claims and underwriting platforms simply in partnership with Google. However, like customer engagement, CIOs face an embedded mindset within the executive team, where the idea of cloud investment is often still viewed as just a method to modernise legacy infrastructure. CIOs will need to change the hearts and minds of fellow c-suite executives if their company is to truly unlock the power of cloud technology.

4.) Implementing technology to maintain and build culture in a mixed workforce

A mixed model of on-site and remote working is the future of work. Especially as countries seesaw between implementing and lifting lockdowns, workforces will be made up of hybrid digital and on-site employees. Working closely with the people function, CIOs will need to consider the sort of technology that can maintain team cohesion, ensure visibility so that remote and on-site employees are performance managed equally, and that will enable people to mimic the ‘watercooler’ moments remotely. Most employees now expect a blended remote and on-site working lifestyle. Insurance firms will therefore need a technology infrastructure that replicates for remote employees both the collateral learning that comes from sitting next to someone and the collective engagement that comes from office camaraderie.

5.) Adopt newly defined leadership traits

When Coronavirus began to upend both the social and business environment, certain leadership traits quickly emerged as the most successful for navigating organisations through the crisis. The best c-suite leaders demonstrated a desire to communicate consistently and to convey a message of ‘we’re all in this together’. When managing the most distressing aspects of the virus’ impact, they used compassion, empathy and humility to connect with their teams and displayed genuine authenticity, regardless of the function they led. Importantly, the most successful leaders were, and still are, making brave decisions at speed, and are now either building upon or adapting their organisation’s cultural identity to instil a sense of purpose in the workplace. Due to the demands of the pandemic, CIOs have found themselves in the hotseat and their role is central in guiding organisations out of the crisis; adopting these new leadership traits will be paramount to their success in achieving this.

CIOs in insurance face a particularly tough challenge – an industry that is on the one hand taking steps to redefine itself digitally, but on the other is still working under traditional approaches to technology, all of which is taking place during a global pandemic. To come out stronger on the other side, CIOs will need to convince their fellow c-suites of the benefits of investing in the customer journey, help their business unlock the power of the cloud, and make remote-working a long-term success that coincides with transformation. Finally, and while it may seem obvious, they should remember that the world has changed, and that this change demands a new quality of leadership.

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LightArt’s Project Demonstrate What The Future Hold For Real Estate Market

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This piece explores how LightArt byTom John Or-Paz seeks to leverage art to improve neighborhoods at scale in the branded real estate sector.

Tom John Or-Paz’s LightArt Project Demonstrates What The Future Hold For Real Estate Market

Urban neighborhoods across many cities of the world have been recording a rapid rise in gentrification over the last few decades. Sometimes, multiple neighborhoods in the same city are gentrified simultaneously, as in the case of Washington DC with close to 150 gentrified neighborhoods between 2000 and 2013.

LightArt's Project Demonstrate What The Future Hold For Real Estate Market 4

Depending on who you ask, gentrification could either be seen as a blessing, a curse, or a mix of both. Urban theorist Richard Florida observes that gentrification is a symptom and potentially a cure, for the scarcity of quality urbanism.

In his words, “the driving force behind gentrification is the far larger process of spiky reurbanization—itself propelled by large-scale public and private investment in everything from transit, schools, and parks to private research institutions and housing redevelopment.” This peice explores how LightArt, a new player in the branded real estate industry seeks to leverage art to improve neighborhoods at scale.

The process of gentrification and its impact on real estate

There’s no single all-encompassing definition for gentrification but it broadly refers to a process by which a neighborhood experiences some infrastructural and socioeconomic changes due to a surge in real estate investments and an influx of new higher-income residents into an erstwhile historically disinvested neighborhood.

On the plus side, gentrification can transform disinvested neighborhoods into thriving centers of economic prosperity. The influx of real estate investments leads to the renovation of infrastructure, parks, and public areas. The rise in construction activity leads to a job boom, and the newly-opened service and retail businesses also hire more people. There’s also been a direct correlation between gentrified neighborhoods and an increase in the property tax base which in turn provides more funding for local public schools and makes the local police force better equipped.

On the other side of the coin, there are arguments that gentrification eventually prices out longtime residents of a neighborhood from renting or buying properties in a place they’ve called home for decades. There’s also the argument that lower-income residents of gentrifying neighborhoods often become economically marginalized. Another critical but unquantifiable effect of gentrification is the argument that it destroys the soul of neighborhoods.

How LightArt wants to merge art and real estate to improve the curb appeal of neighborhoods at scale

Tom John Or-Paz, a millionaire entrepreneur believes that art can be a valuable tool to improve the curb appeal of neighborhoods and to unlock the positive features of gentrification at scale. Tom wants to rethink neighborhoods through his new company, LightArt, a branded real estate company seeking to facilitate the intersection between modern art, intentional design, and functional living spaces.

According to Tom, “for us, art is an emotional journey that turns a standard project into a way of life.” LightArt works with a team of cultural consultants, artists, designers, and architects to transform a regular property into the envy of the neighborhood by combining art and color with community life.

Tom John Or-Paz has been involved in the branded real estate space since 2013 when he was the Senior VP of Business Developments at Fashion TV, a position from which he led the company to launch its first branded real estate project. Afterward, he got involved with many other branded real estate projects across Europe, the Middle East, and emerging Asia.

Tom John Or-Paz started LightArt in 2019 and now, LightArt is starting out with its first branded real estate in the Florentine neighborhood of Tel Aviv, Israel. The neighborhood had previously been known for commerce and trade, it had a TV series named after it in the 1990s and it is now gradually being transformed into an urban bohemian neighborhood with pristine beaches, excellent nightlife, and Bauhaus-inspired buildings for artsy souls.

There’s no particular rhythm or rhyme to how or where gentrification happens. In Lisbon Portugal, the medieval Mouraria neighborhood used to be dilapidated up until 2009 when it started getting gentrified. It has now become a dining destination with fantastic hilltop views.

The same is true if you’ve recently been to the Villa Crespo neighborhood of Buenos Aires in Argentina, you’ll most likely remember its nice mix of modern art, cool retail shops, and historic synagogues. Yet, it wasn’t always that cool and it had previously been a crumbling relic of a historically Jewish community before being revived by gentrifiers.

LightArt however differentiates itself from the competition in the branded real estate sector by working with real estate developers in the post-planning and permit stage by infusing art into their base designs.

Beyond infusing art into the designs, LightArt also ensures that the properties are outfitted with the latest smart home technology systems from the ground up. The properties have leading smart home technology, automated parking service, and an app-based property management service. LightArt also works with the property developers to market the properties to the right prospects.

LightArt also commissions and provides the artwork for the external and public areas of the properties while working with the people that purchase the properties to style the interior to match their art tastes and design preferences. LightArt then  facilitates a concierge service that refreshes the look and feel of the property by refreshing and replaces the artwork every quarter.

What does the future hold of the real estate market?

Branded real estate is becoming increasingly popular and they could become the new standard for the real estate industry. Liam Bailey, head of Residential Research at Knight Frank and author of the Global Branded Residences – 2019 report observes that “it seems likely that as global wealth creation expands, the demand for high-quality residential development property in key global centers will undoubtedly rise.

Apart from the appeal and emotional sentiments of living in a branded property, branded properties provide an additional layer of trust, security, and provenance because the success of the venture influences how the brand name attached to the project is perceived.

Likewise, Liam’s report also shows that that branded real estate also benefits the property developer. For instance, branded real estate is reportedly valued by as much as 34% on average than non-branded properties. Granted, the higher valuation of branded real estate varies from  5.7%in Jakarta to 45%  in Puerto Rico and as high as 120% in some exotic markets such as Dubai.

Branded real estate provides more identification and endorsement for people who want to be associated with the lifestyle of the brand. Thankfully, art unifies people across socio-economic divides and LightArt might be up to something in its bid to leverage art to get the best out of gentrification without robbing neigborhoods of their souls.

 

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