The Invisible Gorilla Experiment, conducted by researchers Daniel Simons and Christopher Chabris, reveals how our focus can make us miss obvious things. The study showed research participants a video and asked them to count how many times three basketball players wearing white shirts passed a ball. After about 30 seconds, a woman in a gorilla suit walked into the scene, faced the camera, thumped her chest, and walked away. Surprisingly, half the viewers missed her. This inattentional blindness shows how we can completely miss unexpected objects or events, even when they’re right in front of us. [Note: I admittedly failed to see the gorilla the first time someone tasked me with watching the video a few years ago.]
The Invisible Gorilla in Enforcement Actions
Whenever a banking agency announces an enforcement action, LinkedIn posts flood in about BSA/AML and third-party oversight issues. These topics capture attention while program management remains the overlooked element – the invisible gorilla.
Did you know the term “program” appears 35 times in Evolve Bank and Trust’s order and 20 times in Lineage Bank’s consent order? I could not find any program management posts about enforcement actions on LinkedIn.
The often-overlooked field of program management tackles most deficiencies highlighted in the enforcement actions. Rules, laws, and regulations do little to help us learn or build skills for completing a staffing assessment, designing and building reports and dashboards, or developing an effective issues management process. A brief review of the Project Management Institute’s Standards for Program Management (“Standards”) reveals it is a far better resource for those activities.
Staffing Assessment Example
Most of the recent enforcement actions include a requirement for the bank to perform a staffing assessment. Below is an example of staffing assessment language under a Third-Party Risk Management Program provision.
The Standards identify this potential misalignment between program resource requirements and current capacity and capability as a critical risk.
The Program Definition Phase Activities section of the Standards emphasizes the need to estimate the resources (e.g., staffing) required.
And then the Standard’s Program Delivery Phase Activities section further emphasizes the assignment of roles and responsibilities to individuals and groups.
The above section matches up well with that of another enforcement action’s emphasis on the ongoing responsibility of the bank to properly staff its business line.
Build a Competitive Advantage
Weak program management capabilities clearly increase the likelihood of an enforcement action. Take a look below to see a few ways that bank leaders can improve their organization’s program management capabilities.
People
- Provide project and program management training to your existing team members leading compliance and risk management functions.
- Add a program manager and/or individuals with significant program management experience to your compliance and risk management teams with.
- Ensure the Project Management Office (PMO) adequately supports your compliance and risk management functions.
Process
There are volumes of books on program management processes and activities. At a minimum, every partner bank should have solid, documented processes for each of the below:
- Staffing assessment
- Change management
- Issues management
- Reporting and monitoring
Technology
- Recognize that spreadsheets (e.g., Excel, Smartsheet, etc.) alone are insufficient for tracking and reporting of programs of this complexity.
- Implement data management practices to support timely and accurate reporting on program performance and status.
- Invest in a GRC (Governance, Risk, and Compliance) platform to properly manage the tasks, documents, issue management, reporting, and control monitoring of the multiple programs (BSA/AML, Information Security, TPRM, Compliance Management, etc.) involved in Partner Banking.
The partner banking model offers banks significant loan, deposit, and fee income opportunities. Strong program management capabilities offer those partner banks a competitive advantage and a path to scale their compliance and risk management programs cost-effectively.