Compliance & Ethics
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The Diligent team
GRC trends and insights

5 elements of an effective compliance program

August 10, 2022
0 min read
Image representing the 5 elements of an effective compliance program

The regulatory compliance landscape shifts endlessly, creating ever-changing challenges for anyone responsible for compliance, risk, governance or internal audit.

Evolving regulations and best practices cause headaches for anyone in these teams, whether you're a multinational firm trying to keep track of requirements across jurisdictions or a smaller business grappling with a single country's regulations.

However, the good news is that, by implementing key elements of an effective compliance program, you can foster greater compliance at your organization and remain equipped to tackle whatever challenges the regulatory regime throws its way.

Having a clear structure allows you to scale up or down your compliance approach to meet changing demands - as well as make your processes more consistent, robust and easy to follow.

What Is Regulatory Compliance and Why Does It Matter?

First, let's revisit why compliance is so important - and becoming increasingly so.

In a world of uncertainty and change, the governance and reassurance provided by regulatory compliance gives customers and clients confidence and should ensure that businesses operate in an ethical way.

Demonstrating that you fulfil your ever-expanding regulatory obligations is shorthand for being an organization that puts customers first. It's a signpost to prospective clients that you're a trusted firm. It protects and enhances your brand reputation. (And of course, with regulators able to impose severe penalties for non-compliance including fines, the enforced retraction of financial promotions and in some cases, the closure of your firm, the business and financial incentives are compelling too.)

Robust processes and checks, policed via regular compliance monitoring, underpin your ability to deliver this good governance.

Strengthen Your Approach to Compliance

Fortunately, there are some simple steps to creating an effective compliance program.

First, you need a culture that stresses good governance from the top down. Your leadership team must be fully on board with your efforts to make compliance as watertight as possible - a 'do as I do' culture underpins your efforts, while a 'do as I say' approach serves only to undermine them.

Then, you need to communicate that while you may have a compliance team, good governance is not solely that team's responsibility. Compliance should be everyone's responsibility, with internal audit, general counsel and company secretaries, risk officers, marketing and sales teams and other areas of the business all playing their part.

Having clear processes makes it more likely that they will be followed. Mandating stages like compliance team review and approval of financial promotions goes a step further, reducing the chances of non-compliant materials slipping through the net.

Many firms have found that a degree of automation has helped here, increasing rigor, clarifying processes and making compliance team review an inherent part of operational processes.

Whether you're responsible for operational or other elements of a compliance program, there are some universal steps you can follow to make your procedures more robust.

The 5 Stages of an Effective Compliance Program

So, what are these effective compliance program steps, and how can you ensure they're embedded into your compliance processes?

  1. Measure Your Compliance Program Never underestimate the importance of compliance monitoring. Measuring against best practice and reviewing your own approach in response is an essential first step in any effective compliance program. Assess your risk, measure how well you're performing against current obligations and identify any gaps. This way you will create an action plan with clear priority areas for focus.

    Of course, the challenge with measurement is that your obligations don't stand still. Whether you're having to adapt to entirely new regulations, such as the GDPR, or deal with smaller tweaks to existing regulations, the compliance landscape is constantly evolving.

    Measuring once is therefore not enough; you need to monitor your performance continually if you want to get a clear picture. This can be resource-intensive, at a time when organizations might already be dealing with increased workloads and a reduced workforce. Other priorities' often tactical business as usual (BAU) activity' can push strategic compliance improvements down the to-do list. You also need to make sure your approach to measurement is comprehensive. Geographically diverse teams can make it hard to get a handle on global approaches, with actions needed for global and local entities differing.
  2. Turn Insights Into Action There's no point measuring and monitoring if the findings aren't acted upon. Once you've got a true picture of your current performance and any shortfalls, you need to take action. Identify your desired 'future state' in terms of regulatory compliance, then put in place clear steps to get there. The actions we've outlined above'tackling your culture; getting senior-level champions; stressing the need for everyone to play a part; perhaps investigating automated solutions to support your compliance policies' might be a good list to start with.
  3. Clearly Communicate Roles and Responsibilities As we've said above, meeting your regulatory obligations shouldn't be left only to the compliance team. Everyone has a role, and these need to be made crystal clear' particularly if traditionally, your organization has made the compliance team solely accountable here. Ensure that everyone has access to the systems and tools they need to fulfill their responsibilities. Make deadlines clear, so everyone knows what's expected of them and by when. Automated processes can be invaluable here; there are many benefits of compliance solutions, including the ability to create unambiguous workflows, clear processes and calendar reminders, so anyone allocated a task has no excuse for being unaware of or forgetting their obligations.
  4. Streamline Your Processes Often, compliance can become a by-word for inefficient manual processes. Streamline your approach and you make it far more likely that people will do what's required. Automation not only reduces the labor-intensive nature of compliance obligations, but can enable you to spot any issues swiftly, so they can be managed and rectified in real time. And by reducing manual interventions, you save time that can be spent focusing on more strategic issues' therefore tackling the conflicting tactical and strategic priorities identified above.
  5. Review Regularly As we mentioned above, compliance never stands still. The right approach today may need subtle tweaking' or even wholesale re-evaluation' at a later date. Make sure your approach stays on point through regular reviews' and ensure you have the data available to respond to any compliance audit notices or regulatory visit. However robust your approach, your organizational compliance may benefit from recalibration.

Streamline and Optimize for an Effective Compliance Program

Keeping pace with an ever-evolving compliance landscape is clearly a challenge. But it’s one compliance, risk and other governance professionals are trained and equipped to deal with.

Putting a degree of rigor into your approach via a compliance program incorporating these five stages will certainly make it more robust, and more able to respond to your changing obligations.

Those looking to ensure their compliance program is effective should consider Diligent Compliance, which empowers compliance teams and internal auditors to measure their compliance program, identify gaps and risks and continually improve and keep pace in an evolving landscape.


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