Rewriting Risk with No-Code: New Frontiers in RegTech & RiskTech

Risk management and regulatory compliance have become two pillars for increasing the resilience of the financial services industry. It is often defined as brakes in an automobile, which allow the vehicle to move at a faster pace and provide protection in case of potential problems. With increased business complexities, interconnected markets, and fast-paced decision-making requirements, risk management and compliance need to be one step ahead in order to ensure financial stability in the market. Leveraging technology for efficient risk management and effective compliance management has become almost a mandatory requirement across organizations.

Risk management and regulatory compliance have become mainstream priorities in recent years. As a result, there has been a growing emphasis on leveraging technology to effectively manage these requirements and drive greater efficiency, accuracy, and agility across organizations.

One of the primary challenges in both RegTech and RiskTech is the constantly evolving nature of regulatory and risk requirements. These domains are highly dynamic, and as a result, automated solutions can quickly become outdated. Unless organizations have the capability to continuously adapt and update their automation in line with changing requirements, users inevitably revert to manual processes or Excel-based solutions.

Another critical aspect is the speed of implementation. Changes often take considerable time to execute, and by the time they are rolled out, the market dynamics may have shifted or the regulatory landscape may have evolved, rendering the solution less effective or even obsolete.

Effective risk management also involves fostering a culture of acceptance and transformation within the organization. It is often either oversimplified, leading business users to underestimate its importance, or made overly complex, causing them to disengage. Striking the right balance and integrating risk management into the mainstream of organizational processes is essential. Regulators across various geographies are increasingly emphasizing the need to strengthen risk culture within organizations.

The no-code revolution over the past few years has empowered practitioners to manage risk and regulatory requirements dynamically within automated platforms. This shift has significantly reduced the reliance on Excel sheets, which were once the preferred tool in earlier times.

No-code platforms have brought a few changes to address the challenges mentioned above:

1. Data management for risk and regulatory requirements has become significantly easier compared to the pre–no-code era. The availability of clean, high-quality data is almost a prerequisite for meeting risk and regulatory requirements. No-code platforms have empowered risk managers to handle data independently, without relying heavily on data scientists or engineers. Tasks such as data preprocessing and setting validation rules have moved to the front end, enabling risk managers to focus more on enhancing the quality of analysis rather than spending countless hours preparing data for it.
2. Change management has become significantly easier with no-code platforms compared to traditional technologies. Whether it's a workflow-based solution requiring organizations to demonstrate governance in line with regulatory changes or an analytical solution where the treatment of various positions shifts with market conditions, no-code platforms enable these changes to be implemented far more seamlessly. This flexibility greatly enhances responsiveness and reduces the time and effort typically associated with change management in conventional systems.
3. The reliance on coding expertise for effective quantitative risk management has significantly reduced in recent years. Previously, being a successful quantitative risk analyst often meant being highly proficient in programming languages like R or Python, or platforms such as SAS and MATLAB. The ideal combination of deep risk knowledge, market insight, and advanced coding skills was rare, limiting the field to a select few. Today, with the advent of no-code analytical tools, professionals with strong conceptual understanding of risk can build and manage quantitative models without needing exceptional coding abilities.
4. Active involvement from senior management and a firm-wide understanding of risk and compliance requirements are essential for effective governance. No-code platforms simplify the interpretation of complex requirements for everyday users, thereby facilitating the adoption of a strong risk culture at the leadership level.

No-code platforms have significantly evolved over time. In their early stages, these platforms primarily focused on workflow-based solutions. Today, many no-code platforms are equally capable of handling data, performing complex analytical and statistical analyses, and building sophisticated workflows. As a result, organizations are increasingly adopting no-code solutions to meet their risk and regulatory requirements more efficiently and flexibly.