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Bear Markets Heighten Risk of Audit & Litigation

by | Jul 27, 2022

Why do Bear Markets increase the risk of litigation and audit? We’ve seen this play out before.

When Wall Street was booming leading up to the housing and financial crisis of 2008, the U.S. financial system seemed sanguine, so regulators and investors saw little reason to press for regulatory change. But, once widespread predatory lending practices and other forms of malfeasance were broadly disseminated into the financial system through mortgage-backed securities and collateralized debt obligations, the proverbial house of cards came crashing down.

This, in turn, led to the most extensive regulatory reform since the Great Depression. And few argued the need to more effectively police and “promote the financial stability of the United States by improving accountability and transparency in the financial system.”

Transparency is a by-product of robust records and information management as detailed in ARMA International’s The Principles and the International Standards Organization’s Standard 15489.

Why is this relevant now?  Bear markets serve as a catalyst for increased litigation and regulation, and we are already seeing evidence of this in 2022. Increased litigation means stopping deletion and destruction of responsive documents (so does a regulatory audit).

The past two plus years of remote work likely means that those records may not be easily identified and “held”, especially if there isn’t a system of record that has been easily accessible through the cloud or VDI.  Once an employee searches for and retrieves information they need to do their job, they are very likely to download it.

Is the “real” record the one in the shared drive or the one they made notes on and revisions to on their laptop? Is it the one in their email inbox?  Is it in their OneDrive?  SharePoint? Teams? Google Docs?  Are you confident that you can find all the responsive records for either litigation or audit in the timeframe required?

If you’re not, reach out to WIS. We will assess your processes, find the gaps, identify the risks and help you map out the road to improvement.

Written by Cheryl Young

Cheryl Young (Senior Project Manager, CSM, CSPO, IGP, CTT+, ermM, ecmP) has been active in the records and information management field for over 30 years as a business process consultant, trainer, records manager, information analyst, contracts manager and project manager with specific expertise in RIM projects trusted systems and Lean process analysis. Cheryl is a frequent speaker with AIIM and ARMA.



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