The Evolving Role of Compliance Officer

When SAI360 founded Compliance Officer Day in 2016, significant changes were happening to the compliance officer role and the professionals dedicated to it. The speed at which the industry has evolved since then is surprising even to those closest to it.

With changing regulatory obligations and shifting societal expectations, the role of the Compliance Officer has become a multi-dimensional challenge. Not only has the skill set of Compliance Officers grown in tandem with the velocity and complexity of risks and regulations, but ethics, culture, and values have also become more crucial to their role. Compared to a decade ago, it’s a very different world for Compliance Officers.

Compliance officers do a lot more than just ensuring that organizations avoid penalties. And they no longer take a backseat to front office profit-makers. Compliance Officers are full business partners and organizations’ lead advocates of “doing the right thing.”

This new breed of compliance leaders are tech-savvy and people-, culture- and change-management facilitators of brand resilience. Through training, policies, and procedures, they lead from the front. By identifying appropriate controls and managing the organization’s relationship with regulators, compliance leaders and their teams increase operational effectiveness, drive cost efficiencies, and add value.

Against a backdrop of high-profile misconduct allegations and new regulations enforcing executive accountability, business leaders face pressure to make the board aware of the risk from corporate culture concerns and ethical misconduct. This means that compliance professionals must ensure their organizations meet obligations and add more focus on culture.

Setting the Tone from the Top

“Tone from the top,” a reference to management’s commitment to being honest and ethical, helps embed the right behaviors throughout an organization. It is the bedrock of a robust ethics and compliance program. If lacking, tone at the top can be part of a training program. Never has leadership tone been more relevant than in today’s values-based global economy, where expectations and scrutiny of a business’ practices are so high.

An Industry Week survey of more than 2,000 senior executives found that only 49% of an organization’s leaders are seen as truly accountable. Establishing and strengthening a tone from the top—the CEO, the board, and the CCO—is an effective way to bind an organization together. Without it, organizations may find themselves facing potential business and reputational damage.

Corporate activism is now common, with CEOs vowing to protect the environment, embrace sustainable practices, and “foster diversity and inclusion, dignity, and respect.” Long-time sustainability and environmental supporter Patagonia founder Yvon Chouinard transferred his stake in the company to the Patagonia Purpose Trust to ensure the company maintains its commitment to corporate responsibility and reputation for donating 1 percent of its profits.

Company leaders who have the courage to insert themselves in morally complex debates, and have the fortitude to stand by their principles, regardless of profit implications, are certainly strong ethical role models who can potentially increase employees’ moral engagement or resistance to immoral acts.

Compliance Officers are Now on the Front Line

Expectations for Compliance Officers have never been higher. The prolific growth of social and mobile technologies, the pressures mounted by conscious consumers and Environmental and Social Governance (ESG) investors have firmly planted us in an era of transparency and ethical capacity for businesses.

This means Compliance Officers now have broader responsibility for policies, procedures, and controls to create a truly ethical business, which heightens the tension between growing regulatory obligations and the pressure to do more with less.

Despite budget challenges, there’s an opportunity for compliance functions to evolve and adapt in response to the changing nature of business and regulatory expectations. This is especially true as compliance becomes more data- and technology-dependent with regulations evolving into a “show me” culture. Compliance teams are now required to use more sophisticated tools to enhance monitoring oversight.

The challenge for Compliance Officers continues to be closing the gap between the past and the future, while ensuring their teams have the tools, techniques, and learning solutions to keep up with the fast-changing regulatory environment. With Compliance Officers leading them, compliance teams are well-positioned to provide the value-added services that are needed to boost operational effectiveness, increase cost efficiencies, and ensure flexibility to meet new and evolving challenges.

Find out more about Compliance Officer Day.