By Joe Colaizzo, Director of Risk Management, Mediant
If the age of COVID has taught us anything, it’s that we need to think and work differently. Different approaches in the ways in which we serve our clients. Different methods in how we communicate with our employees. Different processes to ensure we run our operations with optimal quality and efficiency. And while we have had to employ these different ways of working, expectations and demands from internal and external stakeholders have increased.
For the distribution of investor communications, this challenge is compounded by a surge in the retail investor market. The average daily volume of equities has more than doubled since 2019, $7 billion vs. $14.7 billion in early 2021, according to Piper Sandler, a leading investment bank and institutional securities firm. The resulting growth of shareholder communications that brokers and issuers are now required to contend with has placed great pressure on the leaders of these heavily regulated business entities.
Investors expect ease of access to their documentation and shareholder meetings, accuracy when recording their voting preferences, and security of their information. Risk management, often seen as a hurdle when it comes to delivering business objectives, can be a powerful ally in meeting shareholder expectations and enabling effective investor communications. When taking a risk-based approach to managing your investor communications program, consider the following areas:
- Product delivery. As new tools and technology are implemented to provide all shareholders the ability to vote their proxies and attend shareholder meetings, knowing the risks and opportunities can enable business leaders to make optimal decisions.
- New vendor relationships. Brokers and issuers regularly engage a third-party vendor to provide investor communications solutions. Including risk management as part of the due diligence process will help ensure that the best interests of both clients and the business are met.
- Information security. Ensure the protection of data and the availability of security control systems. External threats are becoming more prevalent and sophisticated as we’ve seen with the recent SolarWinds cyberattack. Prioritize investment in an information security program that continuously improves security controls internally and through key external partnerships. Even better, work with a vendor who is SOC 2 Type II compliant, which demonstrates that the vendor is securely managing systems and data to protect its company and clients.
- Risk-aware culture. How effective are interactions with your investor communications partner? Do you collaborate with your business partners in the development of solutions, ensuring that all voices are heard? Are appropriate transparency and remediation activities in place for when things go wrong? Prioritizing certain competencies contributes to having a risk-aware culture and enables you to quickly respond to client requests, meet regulatory obligations, host virtual shareholder meetings and more.
Partnering with an investor communications technology solutions provider who prioritizes risk management as a key component of its service offering will help you keep pace with the speed of change as well as innovation.
Mediant enables brokers and issuers to execute an efficient and compliant communications program while adhering to strict regulatory compliance requirements and mitigating risk. We tailor our solution to the specific needs of our clients, but our approach to risk management is consistent for everyone. We focus on the security of technology and data against everyday threats; the continually expanding privacy requirements governing the personal and confidential information of our clients and their shareholders; and the quality and effectiveness of our operational processes.
For more information, contact us.
Joe Colaizzo is Director of Risk Management at Mediant. Previously, he led the risk management functions for Vanguard's Retail and International Americas Region. Joe holds a BBA from Adelphi University, an MBA from Saint Joseph’s University and the SIFMA certification.