As compliance programs continue to evolve, the question is, how can we now make them a trigger for growth? It is no longer enough to simply react to new regulations or compliance issues as they arise.
It’s a rapidly changing world - new regulations, more regulations, and the escalating costs of non-compliance. Against this backdrop, what can set organizations apart is the ability to leverage compliance as an opportunity to trigger growth.
The reality is that compliance isn’t getting any easier. Regulators are imposing stricter checks, even as compliance laws rapidly evolve and grow in line with fast-paced markets and technology advancements. New demands and expectations are continuously being placed on compliance functions, including their working techniques and the use of technology.
Regulations need not be all bad. In fact, a strong regulatory environment can make it easier for businesses to expand into new markets globally, protect their interests, and grow at a robust pace. Moreover, regulatory compliance, when executed well in an organization, can deliver a strong competitive advantage that wins the trust of consumers, investors, and other stakeholders.
Compliance programs can play an important role in defining an organization’s culture – turning complex regulatory expectations into simple business language, meeting senior management’s demands, and helping stakeholders monitor whether or not the desired cultural model in an organization has been achieved.
Mature compliance management programs can also catalyze the creation of cross functional compliance teams that understand the impact of regulatory changes across the organization, and take proactive measures to manage risks. In doing so, they help the business perform better.
As compliance programs continue to evolve, the question is, how can we now make them a trigger for growth? It is no longer enough to simply react to new regulations or compliance issues as they arise. Organizations need to be one step ahead, predicting risks, establishing controls proactively, and transforming compliance from a tactical function into a strategic one.
Here are a few best practices that can help organizations make their compliance program an enabler for growth.
As the regulatory landscape grows more complex, organizations need to have a robust compliance vision and strategy that keeps them focused on what’s truly important – such as identifying and addressing the areas of highest compliance risk, and championing a culture of consistent compliance – all while striving to make compliance processes more efficient, less costly, simple, reusable, and reliable.
In high-performing organizations, compliance management programs are aligned closely to the business’s strategic vision and goals. The focus is on streamlining compliance management workflows, while also bringing together people, processes, and technology, and defining clear lines of integration between them.
This strategy ultimately helps organizations create a compliance culture that is sustainable and flexible enough to adapt to future changes in regulations and business operations. It also transforms the way compliance programs are perceived within organizations. Instead of being treated as just another check box exercise, these programs become an important tool to drive value by protecting the organization’s brand and reputation, and preserving its credibility.
Changing the mind-set about compliance will definitely help organizations adhere more effectively to legal and regulatory requirements. More importantly, it will turn compliance into a competitive advantage, giving the organization a genuine edge in the industry.
One of the biggest advantages of a mature compliance management program is that it helps organizations drive successful strategic ventures. It enables stakeholders to understand the compliance risks involved in major strategic decisions such as mergers and acquisitions which are typically important as they involve a lot of money. With timely compliance and risk insights, stakeholders can better identify the risks that could arise in such ventures, and take steps to avoid reputational or regulatory damage. A mature compliance management program also helps organizations assess behavioral risks, monitor the control culture, and integrate security and ethics into the core fabric of the company. All these capabilities make the compliance function an important strategic partner to the business.
To truly add value, a next-gen compliance management program must adopt a forward-looking approach, focusing less on the issues that have already occurred, and instead looking ahead, anticipating the risks that could emerge, and spotting warning signs.
The key to predicting the unknown often lies in data. Most organizations have immense volumes of data that can be utilized to anticipate compliance risks using predictive data analytics and advanced statistical methods. These tools sift through data in near real time, delivering critical intelligence about current as well as emerging risks. Continuous monitoring and analysis of both structured and unstructured data can effectively reduce risks for an organization. There are also collaborative compliance tools that can help in correlating different types of risks, and enabling the early detection of compliance issues which, in turn, give organizations the time and confidence to deal with these issues effectively.
Overall, data analytics are a valuable aid in compliance efforts, feeding useful and timely intelligence back to the organization.
By engaging regulators, auditors, and other stakeholders in compliance programs, organizations can build and maintain confidence in their abilities, and ensure that no compliance effort goes unnoticed. They will be able to provide assurance that steps have been taken to mitigate the risks of corruption, fraud, and non-compliance issues, thereby protecting clients, employees, and third parties. High-performing organizations often go a step further and share the findings of their compliance assessments and audits externally as well. These insights can help drive improvements across an industry.
Several countries have implemented an “audit standard” for compliance management programs. As an example, the International Organization for Standardization (ISO) published an anti-bribery management system standard (ISO 37001) to "help organizations fight bribery by establishing a culture of integrity, transparency and compliance.” These guidelines provide a solid foundation for organizations to build high-performing compliance programs through data in near real time, delivering critical intelligence about current as well as emerging risks.
The global regulatory environment will continue to be in a state of flux. While the US currently mulls over regulatory cuts particularly in banking and financial services, areas like cyber security, corruption, and bribery are witnessing increasing regulatory enforcement across the world. To thrive in this fast changing environment, organizations need to establish a high-performing compliance management program with a well-defined vision and roadmap.
Achieving future-proof compliance means being aware of possible compliance failures and how they could adversely affect the organization. It’s also about positioning compliance to have a continuous strategic impact at the highest levels of the organization.