After the financial crisis of 2008, the role of compliance departments became paramount. To safeguard the global economy against a repeat of the financial meltdown, governments and financial bodies implemented steep re-regulation – and adherence was mandatory. Compliance teams inhabited the frontier between the threat of crippling fines and safe operations.
Moving from Reactivity to Strategy
Compliance has often tended to be seen as a ‘tick-box’ exercise, responding to regulatory requirements by overlaying a ‘compliant’ approach onto business operations or marketing communications. This is changing as compliance professionals are able to provide valuable knowledge that can help guide firms’ strategic direction, and businesses should tap into this knowledge to make the most of their compliance team’s ability to influence strategy.
How can Chief Compliance Officers respond to the increasing breadth and complexity of their role?
The stringent regulatory requirements, more so, after the financial crisis has exposed a variety of skill sets required to build and maintain a successful Chief Compliance Officer(CCO).
Compliance Function Capability- Capabilities need to be aligned with the firm’s strategy, including whether it needs outsourcing or offshoring as part of its compliance functions. Defining those capabilities should provide the basis for a first view of the headcount and skills gap as well as key people risks across the business.
Compliance Training- Investing in staff and building capabilities require a structured training approach which will include developing behavioral skills and technical knowledge for all levels within the compliance department.
Improving operations, increasing compliance expenditure and meeting compliance mandates are part of the process which is a requisite factor. Achieving effective processes will ultimately result in reduced overall operational risk. This means fewer instances of risk appetite breach, greater standardization and the like. It will also enable the integration of compliance assurance, planning and reporting alongside the business, risk and internal audit.
Systems- Technology is a great enabler when it comes to compliance as it can automate the whole platform. The foundation of effective automation lies in sophisticated processes. Firms are often reluctant to take a forward-looking approach to investment in technology in compliance(for example monitoring).
However, there is a multitude of solutions available, one being VComply.
Integrating the operational and compliance technology platforms enables seamlessness.
Analytics- In order for the compliance department to meet the pool of compliance obligations they face, end to end dataflow and compliance information becomes critical. ‘Analytics’ describes a wide range of data-driven approaches when combined with deep business and sector knowledge, can highlight the risks obscured by large volumes of data.