Results of a 2014 State of Compliance survey conducted by PwC talk about how Chief Compliance Officers (CCO) are finding it difficult to be “Chief”. With organizations being swamped by a growing number of regulatory changes, the head that wears the CCO’s crown certainly seems to lie uneasy.
Revised Responsibilities of a Chief Compliance Officer
Traditionally, compliance largely meant making sure that the company’s business was handled in accordance with federal laws and regulations. The corporation was expected to provide accurate information on its financials and business to investors and regulating authorities, such as the Securities and Exchange Commission (SEC).
However, research consistently shows compliance professionals predicting a steady rise in the time and resources needed to manage changing regulatory requirements. The demands from the function are constantly evolving and there is increasing pressure on the compliance function to become a more strategic one within the organization.
As businesses go truly global and become more complex, Chief Compliance Officers are expected to engage with the business in a whole new way – they are expected to identify and manage a growing list of organizational risks, help bring them to the senior management’s attention and come up with the right mitigation plan, all, while contributing to the corporate’s overall strategy.
How Effective are Compliance Programs
To ensure compliance, it is necessary to have robust processes in place to record, verify, and report the health of the business. The need for implementing a robust compliance program is therefore well understood: a properly functioning one may not bring any accolades to the CCO’s office but a badly executed one can surely attract penalties. Moreover, apart from reducing the severity of penalties, establishing an effective compliance and regulatory reporting program makes good business sense and can enable organizations to better protect the corporate brand by reducing the likelihood of unsavory events.
The same survey on the State of Compliance, also stated that while 71% of the respondents say they assess the effectiveness of their compliance programs regularly, evidence suggests that many are measuring merely activity, rather than impact. Research also shows that as much as 75% of the risk and compliance staff in most organizations is engaged in managing documents and reconciling information as opposed to actual regulatory risk and compliance. This can become possible only if the role of compliance officers moves beyond mere reporting and “traditional” risk mitigation to managing risks of a whole new nature in our global, digital world.
How technology can help reduce a CCO’s burden?
Enterprises planning to establish an effective compliance program should consider adopting Risk Management and Compliance software applications to serve as the foundation of their program. Technology can be a solution to the problem – at least partially, if not fully.
Ø Automation Leading to Quality: A process-backed application can automate mundane, manual and repeatable processes for regulatory reporting. This can free up precious personnel time to focus on what’s really important - analysis of data and identification of potential risks. Technology can help enhance data quality by limiting human intervention and therefore error.
Ø In-built Validation Rules: What matters most for a regulatory reporting is accuracy of data reported. If that can be taken care of with technology, the CCO’s burden is reduced tremendously. Nowadays, many applications come with in-built validations and business rules as per regulatory requirements, thus simplifying reporting accuracy.
Ø Maintaining an Audit-Trail: The other drawback faced in a CCO’s office is personalisation of work. An employee being on vacation or leaving the organization hampers work due to loss of logic on various decisions taken by him while on the job.Technology can also allow compliance officers to track work and maintain that very holy grail of compliance - An audit trail!
The list can go on. Suffice to say that given the complexity of today’s regulatory environment, intelligent technology implemented correctly can ensure consistency, lower the probability of human error and siginificantly reduce an organization’s risk of regulatory non-compliance.
How do you think technology can help enhance Your compliance program?