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The evolution of compliance

 


Financier Worldwide | March 19, 2019


The Financier Worldwide article, “The evolution of compliance," qouted Russell Reynolds Associates Consultant Cynthia Dow on what's driving the evolution of compliance. The article is excerpted below.

As the regulatory landscape has evolved, compliance departments and the chief compliance officer (CCO) have become increasingly important, helping organisations to adapt.

Today, companies are beholden to ever-changing and escalating regulatory demands. As such, there is significant pressure on compliance professionals to ensure that companies meet their obligations. Today, business compliance operates on two levels. First, it requires companies to be compliant with external rules imposed upon the organisation as a whole. Second, it means building internal systems of control necessary to achieve compliance with these external rules.

“The compliance function has seen massive investment over the past decade, thanks to a number of high profile enforcement actions as well as the depth of the financial crisis, and has matured significantly in some industries, particularly healthcare and financial services,” says Cynthia Dow, head of the global Legal, Regulatory & Compliance Officers practice at Russell Reynolds Associates. “Lately, we have seen a marked increase in compliance investment and interest among tech companies, in part as a reaction to the data privacy issues that have plagued the industry.”

Chief compliance officer

Driving the development of the compliance function is the CCO. CCOs today fulfil a business partnership role. They must also be an educator and a facilitator of growth. “The CCO is expected to exhibit world-class leadership traits including excellent and incisive board-level communications, strong internal and external relationships and influencing skills, visionary and transformational team leadership, and a focus on operational excellence, including tailored, pragmatic business solutions and state-of-the-art technology delivered on a tightly-managed budget,” says Ms Dow. “While few CCOs will bring all of these capabilities to the table, what matters most will depend on the particular organisation. Larger, more complex organisations are likely to place the greatest emphasis on leadership and communication skills, for example, while less mature ones may need to focus more on breadth of technical compliance expertise and operational excellence.”

Many CCOs sit on boards and report directly to the chief executive. They are no longer on the outside looking in on business development; instead, they are a key cog in the machinations of the C-suite. Accordingly, CCOs must deliver concise, comprehensive and visually interesting representations of key enterprise risks, the compliance programmes which address those risks, and regular updates on programme implementation and risk mitigation. “Boards should expect and require clear lines of accountability through the organisation with compliance roles and responsibilities articulated and allocated to experienced leaders,” says Ms Dow. “Perhaps most critically, boards should require evidence that compliance is not just a ‘box-checking’ activity but one that business leaders embrace and espouse, and which has a demonstrated and meaningful impact on the culture of the organisation.”

To read the full article, click here.




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The evolution of compliance