A practical process mining approach for compliance management

Author:Michael Becker, Rüdiger Buchkremer
Position:UCAM FOM Doctoral School of Business, Murcia, Spain
Pages:464-478
SUMMARY

Purpose The purpose of this study is to examine whether the compliance management activities in the risk management environment of financial institutions can be enhanced using a Process Mining application. Design/methodology/approach In this research, an implementation procedure for a selected Process Mining application is developed and evaluated at a financial institution in... (see full summary)

 
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A practical process mining
approach for compliance
management
Michael Becker
UCAM FOM Doctoral School of Business, Murcia, Spain, and
Rüdiger Buchkremer
FOM University of Applied Sciences, Düsseldorf, Germany
Abstract
Purpose The purpose of this study is to examine whether thecompliance management activities in the
risk managementenvironment of nancial institutionscan be enhanced using a Process Mining application.
Design/methodology/approach In this research, an implementationprocedure for a selected Process
Mining applicationis developed and evaluated at a nancial institution in Germany.
Findings The evaluation of the process data with the Process Mining applicationDisco shows that the
compliance of the real-life executionof business processes can be monitored in real-time. Moreover, potential
non-compliantactivities and durations can be analysedin a detailed manner.
Research limitations/implications When the research results are regarded, it must be considered
that a general conditionfor the usage of a Process Mining applicationis that the process data is available and
exportablein the required format and that data privacy regulations are fullled.
Originality/value This researchpresents a practical use case for the implementation of a Process Mining
application at the risk management department of nancial institutions. It shows the value of using a
technical application to carry out tedioustasks that are usually executed manually. This value is discussed
and compared with the aim to help nancialinstitutions in determining how the effectivenessand efciencies
of compliance managementactivities can be improved. Therefore, this research can be takenas a foundation
for the practicalimplementation of a Process Mining application at nancial institutions.
Keywords Process mining, Financial regulation, Regulatory compliance, RegTech,
Compliance management
Paper type Research paper
1. Introduction
Since the global nancial and economic crisis of 2007-2008, banks and other nancial
institutions have been challenged by the exponential increase of regulatory requirements
(Eggert, 2014;Young, 2013). Moreover, both the total number of new regulations increases
constantly and the degree of complexity of newly developed requirements (Eggert, 2014).
One of the key reasons for the increasing regulation is that governments throughout the
world want to ensure stability and reliability of the nancial sector as a critical part of the
overall economy (Matejasak et al., 2009). However, in the past years, the whole nancial
system became signicantly more complex, with products and world-wide integrated
structures that are challenging to understand and to regulate (Allen et al., 2018). Therefore,
detailed and comprehensiveregulations are required to ensure that the probability of a bank
to experience nancial difcultiesis as low as possible. The bankruptcy of a single nancial
institution can have aconsiderably negative effect on other organisationsand on the overall
local or global economy (Hull, 2015). To be non-compliant regarding regulatory
JFRC
27,4
464
Received28 December 2018
Revised22 April 2019
Accepted17 May 2019
Journalof Financial Regulation
andCompliance
Vol.27 No. 4, 2019
pp. 464-478
© Emerald Publishing Limited
1358-1988
DOI 10.1108/JFRC-12-2018-0163
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1358-1988.htm

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