How To Shape A Future-Proof Compliance Function

As we all know, regulatory compliance will form an important part of an organisation’s governance strategy for the year ahead and for many to come! When done well it can be an effective way to increase consumer and stakeholder trust, improve operational efficiency and support business growth.

However, the pressures facing the future of compliance functions are increasing. Compliance laws are undergoing rapid change in the UK thanks to the effects of Brexit & Covid-19, regulatory bodies are imposing stricter checks and new and innovative RegTech solutions are becoming available. We explore all of these subjects and more in our recent report, RegTech and the changing face of compliance and financial crime, download it today to find out more. 

It is no longer possible for organisations to be merely reactive, responding to changes in regulation and dealing with compliance issues as they come up. Safeguarding the future of compliance functions will require organisations to anticipate risk, establish controls in advance and create a culture of strategic, forward-thinking compliance.

 

RegTech and ESG compliance trends

Some key RegTech and ESG trends to be aware of as you set out the next 12 month’s strategy and recruiting plans:

• ESG data sources will continue to mature and have greater impact on decision making

As the data available from both external and internal sources continue to grow and mature we will see greater effort needed to embed this data into decision making processes across the board.

• Companies will come under greater scrutiny regarding ‘greenwashing’ issues

Stakeholders and regulators will increase pressure on companies to move beyond simply promoting their ‘green’ credentials and instead seek to drive meaningful action.

• Regulators will increasingly support collaboration in RegTech & ESG development

Regulators are increasingly supportive of collaborative efforts to develop RegTech solutions and are providing platforms for data sharing, sandboxes for experimentation with AI and other advanced tech.

• Emergence of RegTech solutions to detect environmental crimes

The technologies for detecting environmental crimes are in their early stages but expect greater development in this area as technology and data are leveraged to prevent environmental crimes as well as the financial and organised criminal activity which is linked to them.

5 Steps to future-proof your compliance function

1. Clearly define your compliance vision statement

You cannot communicate your compliance strategy to others – both internal stakeholders and external regulators and customers – without having a clear idea of what your compliance function looks like.

Being able to do so situates compliance more centrally within your workplace culture, empowers employees across the business to better understand and comply with internal policies as well as external regulations and gives a competitive advantage.

Questions to ask when defining your compliance vision and strategy include:

• What are the areas of highest compliance risk to your business? 
• What are the wider business goals and how can we ensure compliance programs are aligned to these? 
• What areas of Environmental, Social and Governance (ECG) compliance risk are important and in line with wider company goals and missions? 

2. Streamline compliance workflows 

Even smaller companies have a heavy administrative burden when it comes to compliance. When scaled up, the number of admin tasks and documentation required for compliance functions to run smoothly increases exponentially. The consequences of the compliance function failing due to unwieldy workflows are high. 

Automating as much of the routine administrative task as possible has the benefit of reducing the risk of failure and prevents missed regulatory deadlines. As well as providing cost reduction benefits, streamlining audits, and freeing up compliance officers to concentrate on anticipating risk and looking to the future.

3. Leverage RegTech trends to digitise other compliance functions

New technologies have benefits for other aspects of compliance beyond the automation of administrative tasks. The RegTech sector is rich in innovative solutions to compliance functions, such as risk management and security.

There are several challenges to digitising compliance functions including:

• Existing legacy IT systems in place
• A shortage of digital transformation skills
• Wider business resistance to digital transformation
• Data challenges
• A lack of available funding and staffing resources

However, if these challenges can be overcome, the benefits would include advanced analytics embedded into the wider business and the ability to action data-driven strategy better.

4. Use big data to predict unknown risks 

A major factor in increasing an organisation’s ability to be agile and proactive when it comes to compliance is the ineffective use of data. Most organisations, large and small, have access to large amounts of data that could be utilised more effectively to support compliance functions with data analytics software.

By using sophisticated data analysis to better pinpoint the risks that matter, organisations will be able to predict major issues for their compliance function going forward.

5. Include management, internal and external stakeholders in the conversation

By including stakeholders, management, customers, clients, regulators and other third parties in the conversation surrounding compliance organisations can build confidence in the compliance function as transparency can drive improvement internally and in the wider industry. 

How can Barclay Simpson help support your compliance activities? 

Barclay Simpson is an international recruitment consultancy that specialises in recruiting professionals for the interrelated disciplines of governance, namely information/IT security, data, risk, resilience, audit, compliance, legal and treasury.

If you’re looking to find the right candidates to take your compliance practice into the future, we can help with sourcing experienced professionals covering all industry sectors. We also provide effective screening and onboarding support to ensure your new employees align with your company values and culture.

Get in touch today to find out how we can help.