As leaders develop in their roles, the issue of how good management overlaps with governance, risk and compliance can become critical.
Some key compliance focus areas include:
- privacy and data security
- competition and consumer law
- AML-CTF
- anti-corruption, and
- financial reporting.
These issues are currently top of mind with cases such as:
- the Tesco and 3 Mobile data breaches in the UK
- the recent ACCC consent proceedings involving attempted cartel conduct in the Australian financial services industry, and
- record fines of US$277.3 million imposed on the French industrial company Alstom in relation to corrupt payments to foreign government officials.
Often a narrow, regulatory-based compliance system can be seen purely as a silo, which distracts from the organisation’s key mission, whether that is service delivery to constituents or return of profit to investors.
There can also be too much attention paid to the possible financial penalties and reputation damage – the negative consequences of non-compliance – especially when regulators announce millions of dollars of penalties imposed on non-compliant organisations.
When, for example, your sales team is focussed only on the negative consequences, such as possible organisational or personal penalties for non-compliance, this has potential to create an environment where errors are covered up, compounding the problem.
However, seen from another perspective, meeting regulatory requirements can be more than a cost centre. Compliance programs can align with and support the achievement of business goals.
It’s well understood that solid accounting practices can alert management to financial issues well before failure points are reached.
Governance, risk and compliance programs can work in the same way, promoting:
- effective oversight through clearer governance structures
- alignment of organisational strategy across business units or departments
- reduced costs through reduced risk exposure
- higher quality information flow to management
- integrated management of brand strategy and organisational reputation.
In this way, a solid governance, risk and compliance system can promote your organisation’s goals and brand value.
Contributor: Elizabeth Burrows is a founding partner of Executive Coach Exchange and director of influence legal.