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SEC Brings Risk and Data Analytics Together in Exam Unit

SEC Brings Risk and Data Analytics Together in Exam Unit

Many broker/dealers have hired chief risk officers over the years in efforts to focus on risk management controls and processes; now the Securities and Exchange Commission has followed suit. The agency announced Tuesday the creation of a new Office of Risk and Strategy within its Office of Compliance Inspections and Examinations (OCIE), the unit responsible for examining investment advisors. Peter Driscoll, managing executive of the OCIE, will serve as the first chief risk and strategy officer. 

“With the establishment of this new office, OCIE appears to be advancing its efforts to more strategically and effectively deploy its resources, including through the strategic use of technology and data,” said Karen Barr, president and CEO of the Investment Adviser Association, in a statement. “With an office dedicated to streamlining risk assessment and data analysis, we hope that OCIE will be able to continue to increase its oversight of investment advisers.”

Several years ago, the agency changed its approach to exams, focusing its resources on high-risk areas. The agency uses data analytics to point to areas that could be a problem for certain types of registrants.

The change announced Tuesday simply brings the agency’s data analytics and risk teams together into one office to improve efficiency. The new office will focus on common issues, such as high-risk products and high-risk entities.

The SEC oversees 12,000 investment advisors and exams, about 10-12 percent of the industry, each year. The agency recently added 100 new examiners to its investment advisor exam staff by shifting examiners from its broker/dealer unit, bringing the total to 630.

With Jane Jarcho named executive director of the national exam program, Driscoll will now oversee the Washington, D.C.-based examination staff, as well as the new Office of Risk and Strategy. 

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