Posted on November 27, 2024

Compliance is more than an action, it’s a culture. It feeds directly off leaders’ express and implied attitude to risk. Breaking away from the old concept of ‘legal compliance’ or ‘legal and risk’ places compliance in its own category, with specific responsibilities towards understanding what needs to happen, putting in place processes to make sure it happens, and monitoring how well it is happening. No matter what your legal and regulatory landscape is, compliance can be a complex and ever-changing issue to deal with. For many organisations, compliance has become a strategic priority, not simply a ‘nice to have’. In short, a strong compliance program is necessary because it helps protect your company’s assets, and reduces the likelihood of an adverse event happening. It generates trust internally with staff and boards, and externally with clients, customers, and key stakeholders. Beyond that, demonstrates a corporate commitment to acting in a legal and ethical manner.

What will a compliance program do for my business?

Legal and regulatory considerations, an evolving data protection environment, contractual obligations, advertising issues, licensing negotiations. Every business has its own, unique set of requirements. The word ‘compliance’ means different things to different businesses, and there is definitely no one-size-fits-all approach. Understanding and mapping your compliance obligations will ensure that your business:

• is equipped to navigate the landscape, reducing the potential violation of internal and external rules, regulations and policies, in addition to improving workflow efficiency;
• is as protected as possible, with knowledge and understanding of obligations and restrictions, and developing an organisational culture encouraging mindful and ethical conduct, as well as compliance with policies, procedures and guidelines; and
• has the ability to detect and address potential issues, and make fully informed decisions in line with risk tolerance and strategic priorities.

Why build a formal compliance program?

The simple answer is to raise awareness of key issues at both the strategic and operational levels, and to reduce the negative impact of failing to adequate control or account for compliance risks. This is one of the reasons that compliance and risk management frameworks go hand-in-hand: they require structured communication, an understanding of risk tolerance, and demand fully-informed decision making.

Of course, not all businesses have the same priorities and the rationale for a compliance program will vary from one to the other. Your business may operate in a tightly regulated industry and be bound by strict regulatory frameworks. Alternatively, you may have no specific regulation, and your compliance obligations extend to broad legal requirements, contractual issues, and ethical considerations. Either way, the key aims of a compliance program are going to be very similar in any business.

What are the key aims of putting a compliance program in place?

Accountability

Creating an accountability structure is important to ensure issues don’t fall through the cracks. When you have a solid compliance program in place, good communication is paramount and the chance of someone saying “I didn’t know” is vastly reduced. When everyone understands their respective responsibilities, your transparency will build trust with stakeholders and your credibility will improve.

Productivity

Corporate compliance is not a single event. It is a series of decisions and processes, all underscored by the total compliance environment your business operates within. Of course, this can mean many different things to different businesses. However, one common theme is that a structured and dedicated compliance program will enable your business to coordinate resources and streamline processes. In essence, it will save time by developing inventories and standard processes, and will encourage collaboration between business units instead of working in silos.

Tools for success

A compliance program will help provide your business with the tools needed for success - creating an environment of knowledge, understanding and experience. When your business begins to build a compliance program, part of this will be to create the resources your leaders and staff need to ensure its sustainability, whether it is a standard procedure, new training resource, updated communication method, or a modified decision making flow.

Future proofing

Sustainability is at the heart of all compliance programs. Eliminating knowledge gaps and ensuring there is no knowledge deficit is critical. By developing a compliance program and making one person responsible for oversight, this reduces the risk of matters slipping through the net. It also allows your organisation to anticipate potential changes or challenges that may come in the future, being proactive instead of reactive.

Compliance culture

Putting in place a strong compliance program is a great piece of the overall risk management puzzle. Even though it might not happen overnight, a compliance program will help create and nurture an awareness of what compliance is and importantly, why it matters. The whole business is part of compliance, and when everyone shares an understanding and knowledge of what good compliance means, the whole business benefits.

Business enablement

There is often some trepidation when it comes to ‘legal’ or ‘compliance’ getting involved with projects or initiatives. Traditionally, such functions have been seen as roadblocks and as barriers to revenue-generating ideas. By establishing a compliance program and ensuring there is alignment between compliance and the strategic direction of the business, a compliance program can help prevent lost time correcting issues that would have been caught earlier in the project.

Relevant policies and procedures

When compliance and strategy are linked by a robust compliance program, businesses can prioritise and update relevant policies and procedures. The act of building a compliance program will partly serve as a gap analysis demonstrating what processes could be improved, what policies are lacking, and the urgency and importance of each. A compliance program with a policy ownership framework as a sub-section will ensure your business keeps policies and procedures up to date, relevant and visible.

Fully informed decisions

A comprehensive approach to information and communication, combined with a strategic appreciation of compliance, will allow leadership teams to make decisions in the most effective way possible. A formalised compliance program will remove any guess-work and will be more effective at allowing businesses to address issues and green-light projects, in the knowledge that the compliance angle has been covered appropriately.

What should a compliance program look like?

Part of a compliance program relies on risk tolerance and leadership’s appetite to take risks or not. Not all businesses have the same requirements or appetite, and compliance initiatives will depend on business priorities from time to time. A formal compliance program can be as comprehensive or lean as necessary. However, robust compliance programs share some common characteristics:

Leadership buy-in

Leadership ultimately must provide ‘buy-in’. Without this, a business and its staff cannot be expected to inject compliance from the ground up. The ‘tone from the top’ must be consistent and positive, which includes supportive communication and definitive actions. This includes providing public buy-in for compliance generally, allocating sufficient resources in terms of staff and time, encouraging the development of reporting lines, and providing approval for policies and processes.

Adaptable

Not all compliance projects or initiatives receive the same buy-in from the top. Being able to identify and classify compliance issues quickly and consistently, based on the risk tolerance of your business, will ensure the most important compliance issues are dealt with as a matter of priority. Incorporating project and budget planning into compliance initiatives is important, although sometimes, legal and compliance need to be reactive if urgent matters arise.

Sufficient oversight

Considering key milestones and issues is important in the development of a compliance program. Some organisations develop a ‘corporate compliance chart’ to track requirements, assign responsible individuals, and monitor their level of compliance. Having a resource in place to communicate and oversee policies and processes is highly beneficial, and it ensures all key stakeholders are informed on a continual basis. Having sound reporting mechanisms in place is a key component of the oversight function.

Training and resources

It is important to identify what training is required across the different business units, and whether that is applicable to the wider team or is specific to an individual. Developing a repository of documentary resources in a centralised location (e.g. in a shared cloud space that all staff have access to) is important to achieve this. Keeping a record of the type of training and logging relevant sessions is also important as a key tracking metric, as this will help your business see the effectiveness of different training initiatives.

Consistent standards

A consistent and standardised internal understanding of the minimum compliance standards is critical. This can take many forms, but often includes a code of ethics, code of conduct, or a compliance risk appetite statement or statement of compliance values. In addition, relevant policies and processes that explain an organisation’s position towards compliance with the regulatory landscape and industry standards. These things align well with a corporate compliance chart, where relevant compliance information is maintained in one centralised location.

Measurement

Compliance is an ongoing issue. If tracking and monitoring processes are not put in place, there is no meaningful way to measure it. However, by putting some simple processes in place, this can be very different. It starts with deciding exactly what the compliance standards are, recording the main compliance issues, and assigning responsibility for each. By establishing a dedicated compliance function and putting in place a communication, tracking and monitoring compliance controls and action plans, your business will remove the guess-work and can have confidence in its compliance activities.

To find out more about building a corporate compliance program, undertaking a gap analysis, or understanding your limitations, reach out to us at [email protected]. No matter what your starting position is, we would love to hear from you and help you improve your compliance strategy today!