What Happens if Asset Managers do not do Regulatory Horizon Scanning?

Regulatory Horizon Scanning is critical to any Asset Management organisation today. So critical in fact, that not looking ahead to see what regulation is coming up that may or may not impact your business, is a bit like driving a car with your eyes closed. How can you see the road ahead, the signs, the hazards, that person on the pedestrian crossing, or where you are actually going? When we drive a car, we are constantly scanning the road ahead, whether it is just in front of us, or hundreds of yards away. Road hazards are everywhere, and we monitor for them constantly. Asset management firms need to apply the same discipline to regulation, or a crash of some kind is inevitable.

Many of you who drive a car will wonder from time to time if the person who drove through a red light saw it and ignored it, or simply did not see it in the first place. Neither is right, and it is the same for regulation. The person who ignores the red light knows about it but chose to ignore it. Their Horizon Scanning is working, but they made the choice to flout the rules. The person who did not see the red light is either not doing Horizon Scanning, or they are, but it is not working properly. Whether you are a driver or a financial firm, and you go through that “red light,” the results are the same if you are caught.

Not seeing the red light is no defence. Therefore, if your horizon scanning is not good enough to give you an early warning of danger ahead, impact to be assessed, action to be taken, and compliance to be adhered to, then you are already doomed to some kind of “crash.”

Sufficient notice is critical. It allows you to make an initial assessment. If you were driving, it would go something like this…

• Does it look like it might be something we have to adjust our driving for, or is it off the road, and will not affect us?
• If it is on the road, how much will it impede our progress?
• So it is on the road, and it will impede us. How hard do we need to brake or swerve?
• Have we taken all the appropriate actions needed to stop, avoid a crash, and be in good shape to continue once we have got past?

In an ideal world, a driver’s horizon scanning might even extend to using traffic updates via radio or satnav to avoid an upcoming incident completely. In a similar way, that is what Regulatory Horizon Scanning is all about in the financial industry.

• Advanced notice of what regulations are coming and when.
• Best information/detail about which firms are impacted.
• If affected, clear insight into what needs to be done to comply.
• Easier compliance at implementation.

Regulatory Horizon Scanning is vital for asset management firms… akin to driving with your eyes closed. Without it, you risk a regulatory crash. If a crash occurs at your firm, regulators will act. Fines could be issued, permissions could be suspended, firms could suffer reputational damage, reputational damage can lead to loss of business and reduction in revenues. At worst, the business could cease to trade completely! Open your eyes to Regulatory Horizon Scanning today. Maximise your chances of avoiding that regulatory crash.