Compliance with regulatory guidance should be the baseline, not the goal line.
Most institutions treat full compliance like a finish line. But by aiming for it instead of past it, they rarely actually get there. Momentum slows as they approach. Resources shift elsewhere. And then new guidance drops while they're still catching up on the last round.
Now they're playing catchup on two fronts. That game isn't sustainable. It's a ticking time bomb.
The Pattern Nobody Talks About
Bank aims for compliance. Gets close enough. Moves on. New guidance comes out. Bank is already behind before they start. Repeat.
Each cycle compounds. The gap between where you are and where you should be widens. And examiners notice the pattern long before you do.
We've Outsourced Our Risk Management to Regulators
Here's what bothers me about the "compliance is the goal" mindset — it assumes regulators are leading and we're following.
But regulators don't write guidance for fun. They're identifying control gaps across the banks they examine. They're spotting trends in fraud, money laundering, consumer harm. They publish guidance because enough institutions failed to figure it out themselves.
"When we wait for guidance to tell us what to fix, we've outsourced the risk identification function to our regulators."
They're playing risk manager for us. We're just implementing their findings.
Is that what being a risk management professional means? Following guidance? Or should we be identifying the gaps before guidance codifies them?
The Institutions That Get This Right
The banks that operate above the regulatory baseline aren't gold-plating. They're building buffer room.
When new guidance drops, they're already partially there. They're adjusting, not scrambling. They're refining programs, not building them from scratch under examiner scrutiny.
They treat guidance as confirmation of direction, not revelation of what to do next.
What Operating Above the Baseline Looks Like
This doesn't mean implementing every best practice from the largest banks. It means:
- Proactive risk identification: Finding control gaps before examiners do
- Forward-looking frameworks: Building programs that anticipate regulatory evolution
- Root cause analysis: Understanding why guidance exists, not just what it says
- Continuous improvement: Treating risk management as ongoing, not project-based
- Industry awareness: Learning from enforcement actions and peer experiences
When you understand the patterns regulators are seeing across the industry, you can address them before they show up in your examination report.
The Real Question
Are we risk management professionals — or guidance followers?
If your program strategy is "wait for regulators to tell us what needs to change," you're not managing risk. You're administering compliance.
The regulators shouldn't be the ones discovering the control gaps. That's supposed to be our job.
Building the Buffer
Operating above the baseline gives you room to adapt. When new requirements emerge, you're not starting from zero. You're making adjustments to programs that already have strong foundations.
This approach requires investment upfront. But the alternative — perpetual catchup mode, examiner findings, and compounding gaps — costs more in the long run.
And it positions your institution as a leader rather than a follower in risk management.