The perils of electronic communication: results of a financial services industry survey

Abstract

Purpose

This article discusses the perils of electronic communication, the regulators' response to its proliferation, the findings of a recent survey by Orchestria, and the traditional solutions most companies are adopting.

Design/methodology/approach

Discusses results of a survey that illustrates the uncontrollable nature of electronic communication; recent financial services regulations concerning document retention, activity supervision, and communication approval; archiving and other costs of electronic communication; the inadequacy of many companies' risk mitigation strategies; and a recommended active policy management approach.

Findings

The challenge that management and compliance staff face with unstructured communication is twofold: 1. the speed and informality with which messaging systems are used by employees to make assertions and promises and to transfer data, and 2. the almost total absence of management visibility and control over the content of such communications. In the current regulatory climate, not knowing what employees are communicating to each other, clients, suppliers, and other contacts is a significant risk.

Originality/value

Alerts financial services companies to the risks inherent in employees' unrestricted use of all the different electronic communications media and recommends a proactive approach to manage those risks.

Citation

Johns, P. (2005), "The perils of electronic communication: results of a financial services industry survey", Journal of Investment Compliance, Vol. 6 No. 2, pp. 48-52. https://doi.org/10.1108/15285810510644848