In a climate of accelerating change, regulatory risk is constantly shifting. Whether stepping into a new leadership role, integrating after an acquisition, restructuring, or scaling for growth, firms need clarity and control to stay resilient – before regulators or stakeholders start asking tough questions.
Policies and paperwork alone aren’t enough. When business structures shift, legacy controls can quickly lose relevance. That’s when a focused regulatory risk diagnostic is needed to provide clear insight, immediate confidence, and long-term protection.
A regulatory risk diagnostic gives a straightforward, evidence-based view of your risk landscape. It highlights what’s working, where weaknesses remain, and where action will have the greatest impact. This helps businesses adapt quickly in today’s demanding regulatory environment.
In this article, we’ll explore how a regulatory risk diagnostic helps firms move beyond paper compliance, ask the right questions to drive action, apply an independent lens to accelerate progress, and translate diagnostic insights into measurable impact.
How a regulatory risk diagnostic reveals the real picture
Too often, firms confuse policies on paper with proof of control. Static frameworks and risk registers provide a narrative, but they rarely reflect how compliance actually works in practice. Grey areas, inconsistent decisions, and overlooked risk signals can quietly grow into vulnerabilities. Under increased FCA scrutiny, even small cracks can quickly escalate into significant compliance issues.
A regulatory risk diagnostic addresses this by testing how controls work in practice. It helps firms:
- Pinpoint where controls are ineffective or inconsistently applied.
- Identify weaknesses in oversight and escalation processes.
- Flag emerging risks early, before they lead to regulatory exposure.
This isn’t about more documentation. It’s about building a dynamic, operational framework that stands up to both internal and external challenge.
Asking the right questions: from assurance to action
The FCA’s 2024/25 supervisory strategy and Business Plan (FCA Business Plan 2024/25) makes clear that firms must move beyond tick-box assurance and demonstrate real-world effectiveness. Generic risk reviews rarely achieve this. They often look broad but shallow, testing policies and registers at surface level. While they may provide some comfort, they typically fail to show whether controls actually work in practice or where the most significant risks truly sit.
A regulatory risk diagnostic goes deeper. It is targeted and evidence-based, but most importantly it tests how controls function day to day, not just whether they exist on paper. By zeroing in on a few priority areas – such as client onboarding and KYC processes, Consumer Duty outcomes, or prudential risk – the diagnostic highlights operational gaps, pinpoints vulnerabilities, and shows where resources should be directed to reduce exposure. For example, a generic review may confirm that a transaction monitoring policy exists, whereas a regulatory risk diagnostic will test whether alerts are being investigated and escalated consistently.
The result is a practical, actionable roadmap that strengthens internal confidence and provides regulators with clear evidence that the firm’s framework is delivering the real-world effectiveness they expect.
Why an independent lens accelerates progress
The FCA’s Annual Work Programme 2025/26 emphasises governance and accountability, making it clear that firms must be able to demonstrate both effectiveness and independence in their controls.
Relying only on an internal view can leave blind spots. Teams often assess frameworks against their own standards, which risks normalising weaknesses or overlooking systemic issues. By contrast, a regulatory risk diagnostic provides an independent, objective benchmark against both regulatory expectations and industry peers.
For example, while an internal review might confirm that board reporting is taking place, an external diagnostic can reveal whether reporting is sufficiently detailed, challenged and escalated, to meet regulatory expectations.
This independent perspective also prioritises the most actionable fixes, ensuring resources are directed to areas with the greatest impact. In one recent case, an FX brokerage used the findings of a diagnostic to address weaknesses in governance reporting and escalation. Doing so enabled the firm to reduce its risk exposure and strengthen its credibility with regulators.
Firms that apply this independent lens are better equipped to mitigate risk, demonstrate credibility, and safeguard their reputation and future growth.
Turning insight into tangible impact
Uncovering risks is only the starting point. Too often, reviews stop at the diagnostic stage, leaving firms with findings but little clarity on what to do next. Insight without action is a missed opportunity.
A targeted regulatory risk diagnostic is designed to move beyond findings and translate the findings into a clear, prioritised roadmap. It combines external analysis with internal expertise, and assigns clear ownership, allowing firms to prioritise remediation efforts where it will deliver the most value.
This proactive approach drives quick, visible wins while building momentum for longer-term change. It signals to regulators and stakeholders that risks are being managed decisively. It builds trust and reduces the likelihood of escalated scrutiny or enforcement. Most importantly, it creates a strategic advantage, enabling firms to navigate complexity with confidence, stay ahead of evolving expectations, and protect both growth and licence to operate.
How fscom’s regulatory risk diagnostic supports real change
Our regulatory risk diagnostic is crafted for moments of change – new leadership, acquisitions, restructuring, or simply for forward-looking, growing businesses. We deliver independent assessments, highlight gaps, clarify accountability, and pinpoint culture or conduct risks. Executive-ready reporting and pragmatic remediation make your next actions unambiguous.
You get:
- A truly independent review focused on actual exposure, not theoretical risk.
- Targeted analysis of specific areas of compliance such as licensing, prudential risk, SM&CR, Corporate Governance, and others.
- Prioritised, actionable remediation plans with clear and owned next steps.
Ready for compliance assurance that actually delivers clarity, action, and credibility? Get in touch with our team to see how fscom can help you take control, making compliance a strategic asset in any scenario of change or growth.
