This year’s Compliance Risk Study finds a mixed bag of challenges confronting the compliance function. For financial services compliance risk leaders, the study brings good news—and it also brings marching orders.
Chief among the findings is that demand on the compliance function is rising. Rapid-fire marketplace changes, brought about by Fintech, digital, ongoing local/global regulatory revisions, and increases in conduct and human risks, mean new challenges for—and require more front-line support from—the compliance function.
But just when a front-line role is needed, our study finds growth in stature for the compliance function has slowed. Findings show roughly a third (31 percent) of compliance functions report directly to the CEO. That’s good news, but it’s a 9 percent decline from 2014 study results.
Compliance leaders can work harder to demonstrate their value to the business by, among other things, gaining stronger insights into changing customer expectations.
The challenge, though, lies in achieving the right compliance balance. Compliance should remain an objective control function, helping the business comply with regulations and requirements. But 63 percent of respondents fear their independence as a control function could be compromised if they also begin to perform in a business advisory role.
This delicate balancing act can be made easier for compliance leaders if they adopt some guiding principles:
Reassert and refine compliance’s mandate
Improve resource utilization
Make a priority of developing high quality data and a strong technology architecture
Value and build incentives for developing compliance talent
Communicate results regularly, for what might be several years of ongoing compliance progress
Based on our study, compliance leaders are confident of their ability to meet ever-increasing demands. It’s time for them to build the roadmap that brings the compliance function into the future.