An effective compliance program is an integral component of an organization’s success. Regulatory compliance helps an organization from lawsuits and reputation damage and promotes the organization’s value.
Don’t think that the compliance program is a quick fix. Simply having a ready-made compliance program serves no purpose.
Organizations must strive to deliver on the compliance goals continuously – implementing a systematic compliance approach, conducting compliance risk assessments, continuously monitoring and measuring performance, and setting up a hotline for reporting issues.
The US Department of state says that an organization that has identified, assessed, prioritized, and detailed its risk profile will stay confident under investigations or scrutiny. Focus on a risk-based compliance program and build a pragmatic approach towards risk by identifying, assessing, preventing, and mitigating risk.
Paper programs that produce no results are a thing of the past. In the digitally connected world, what organizations communicate about their policies, codes of conduct, and compliance commitments is a reality in the organization.
Modern organizations need to be organizations of integrity. Organizations should walk the talk, and what they communicate to the world should be mirrored in leadership and stakeholder actions and behavior.
Considerations on Operationalizing Compliance
Given the prominence of the compliance program, read on for a brief of what are the strategies business leaders use to drive compliance operationalization.
Appoint a Chief Compliance Officer
Compliance requirements and responsibilities might differ based on the organization’s compliance objectives, industry, and geography. A Compliance Officer (CCO) takes care of external and internal compliance responsibilities.
The CCO oversees daily compliance operations so that the company complies with laws and regulations and ensures that the employees, officers, directors, and associates adhere to the company’s code of conduct and other related policies.
Every organization should have a CCO accountable for ensuring that it remains compliant and upholds its integrity.
The CCO will work with every department within the organization – consulting and advising best practices, training the employees, advising management on possible risks, mitigating risks, and managing effective action plans to audit discoveries and compliance violations.
In the era of ESG, the compliance officer might also be responsible for coordinating environmental and social initiatives.
Operationalize Compliance
Legal and compliance functions try to achieve varied objectives and address different risks. It makes sense to separate legal from compliance functions. The officer in charge of legal should manage legal compliance, whereas the CCO manages compliance responsibilities.
Integrate compliance into an organization’s operations, transactions, and employee behavior and make it a part of stakeholders’ everyday duties. Operationalizing compliance is all about everyone in the organization doing their jobs correctly.
When people do their tasks the right way, compliance follows automatically. To build robust compliance programs:
- Break down the tasks into small increments and integrate them tightly with business operations.
- Bifurcate compliance programs into a series of small tasks and assign them to individuals.
- Bind the components of compliance programs into the controls, procedures, policies, and workflows that govern business operations.
Consider the Extended Enterprise
Today, companies outsource a sizable chunk of their operations to third-party vendors. Outsourcing without oversight leaves the organization exposed to risks.
The modern organization’s compliance issues are the extended enterprise – suppliers, vendors, contractors, consultants, outsourcers, and service providers – their ethical and compliance issues.
Compliance extends to these third-party vendors and should provide a 360-degree view of their compliance framework.
Integrate ESG into Corporate Compliance and Ethics
Organizations that recognize the importance of ESG programs are more appealing to investors, customers, and employees.
If the organization follows a robust ESG approach, is committed to values and ethics, and is mindful of the impact of the organization’s actions on the environment creates meaningful changes for the world and the company.
Usually, the CCO leads the ESG initiatives of the compliance and ethics department.
Implement the correct compliance information and technology architecture
The holistic approach to compliance does more than help build the desired compliance culture. It also helps institute an organization-wide compliance model essential for future-proofing.
On the road to practical implementation, Regtech and compliance technology are a crucial part of the process as these put practical tools in the hands of stakeholders.
They both draw from an advanced technical toolkit to offer compliance oversight, analytics, and mitigation functions.
Long-Term Success For The Future
Effective compliance strategies are key to the long-term success of organizations. Businesses that take the time to integrate all levels of their compliance initiatives empower themselves and create sustainable value for themselves and their stakeholders.