Compliance officers play a critical role in any organisation. They ensure businesses comply with internal and external regulations and policies in a constantly evolving landscape.
But the position involves far more than understanding laws and procedures: modern-day compliance officers must be agile, adaptable advisors who can leverage technological solutions.
What challenges do compliance officers face today?
The world has changed dramatically in recent years, from Brexit and Covid to growing regulations. As a result, compliance requirements have expanded. For example, ever-increasing concern for climate change led to the UK introducing mandatory disclosures in line with Taskforce on Climate-Related Financial Disclosures (TCFD) recommendations.
Enshrined in April 2022, the law currently impacts over 1,300 UK-listed companies and financial institutions. And so, compliance officers must ensure climate risk management policies are up to date.
Alongside keeping up with changing regulations, compliance officers must monitor general trends and disseminate information accordingly throughout their organisation across areas such as:
- Diversity and inclusion.
As well as pressure from society to be more transparent, the Financial Conduct Authority (FCA) implemented new diversity and inclusion rules in April 2022. - Vulnerable customer management.
Ensuring this customer base is fairly treated is another topic firmly on the FCA's radar. - Employee mental health and well-being.
Considering one in four adults experiences mental illness, it's no wonder this is a high priority. - Fraud.
With incidents of fraud increasing substantially over the last two years, training on fraud risks has become all the more important.
What does the future of compliance look like?
With the role of compliance increasing in complexity, the need to embed policies becomes more pressing. For example, by introducing a centralised policy hub, compliance officers establish a culture of trust, integrity and accountability. Meanwhile, businesses in digital-first spaces will move towards embedding risk management into products, services and processes by design.
The future is also about making investments in compliance go further. How? By managing the right mix of people, technology and processes.
- Operating model. Is your risk framework consistent and aligned within your company?
- People. Does your compliance team consist of the right people, and does your culture help or hinder compliance?
- Technology. How are you using automation, what are you doing to keep it checked and balanced, and how would you rate the quality of your data?
Indeed, how you design your operating model and the technologies you use impact the people element and the skills they need.
In terms of technology, artificial intelligence is playing an increasingly prominent role in many industries, with the global market predicted to reach almost $71 billion by 2023.
How can AI assist compliance? The technology processes huge amounts of data quickly and accurately; when applied effectively, human error is addressed, risk is reduced, and costs fall.
What skills will future compliance officers need?
As well as capitalising on automation and AI, the future involves the compliance officer's role morphing from an inspector to a business advisor who supports responsibility and creative risk-taking. Your compliance team must be on board with that ethos.
In terms of skillset, there are a handful of core traits future compliance officers need, from tech-savviness to effective problem-solving.
1. Creative communication
Often, employees see compliance as an annoyance; compliance training is viewed as a time-consuming inconvenience. To build compliance into company culture, compliance officers must gain and maintain employee trust and foster engagement. It's about making people aware that compliance is way more than regulations.
Therefore, compliance officers must be strong and creative communicators – influential from the board level down, and visible across the entire organisation.
2. Solution-orientated
Compliance officers of tomorrow are also first-rate problem solvers. They look at issues from all angles, juggling the necessity for compliance with other relevant factors. They find a way to move forward, rather than simply pointing out risks. Sometimes, that involves challenging and uncomfortable conversations, which is where empathy and the 'people' consideration come into play.
3. Technology-driven
Best-in-class compliance officers harness the power of technology rather than shying away from it. They adopt a forward-looking approach and are confident developing and testing tech-forward compliance solutions.
Digital-first is here to stay and automation is advancing, so skills across areas like data interpretation, analytics and cyber risk are no longer 'nice to have', but essential.
4. Proactive by nature
There's no doubt about it: compliance officers have a lot on their plate. Supporting compliance and ethics across an entire organisation, they must stay abreast of governance, risk management and compliance (GRC) changes, update compliance courses accordingly, and track who's completed their training.
Their role also involves monitoring processes and procedures, managing information flows, acting as a contact person and liaison, having a deep understanding of key business issues and goals, and conducting regular compliance assessments. To fulfil the varied position effectively, compliance officers must have their finger on the pulse and be proactive.
5. Agile mindset
Agile thinking revolves around collaboration, flexibility, focusing on people, learning quickly and acting fast. Moreover, an agile culture values innovation, experimentation and transparency. Combined, these attributes help compliance officers prioritise, build trust, and deliver results in a streamlined way. The compliance arena is ever-evolving, so compliance officers must embrace change and have the ability to adapt swiftly and efficiently.
How is the role of compliance changing?
According to research by Gartner, compliance technology budgets have grown 180% since 2019 in response to new business needs. Digital transformation plays a role, and with Covid massively accelerating that trend, compliance officers have been required to adapt quickly and efficiently.
Moreover, since the global pandemic swept through our lives, operating models have been disrupted, and many workplaces have implemented a permanent hybrid working policy.
This nuanced model impacts compliance officers, requiring them to reassess risks on a long-term basis. For example, remote oversight is now a larger component of risk management, and employees must be trained on compliance risks when working from home on topics such as:
- Data protection
- Inclusion and diversity
- Information security
With the rise of hybrid working, it's also crucial to cultivate a human-centric compliance culture. To achieve that, compliance officers should encourage diversity, equity and inclusion staff to work with HR employees to ensure fair opportunities. Moreover, managers may require additional training on how to best support their teams, given there's less in-person interaction.
How can organisations future-proof compliance?
The world of compliance is fast-paced, involving anything from bribery and corruption regulations to diversity and inclusion policies. Recently, hybrid working, climate change and technological advances have had an impact, and they'll continue to do so.
To tackle the challenges of tomorrow, next-generation compliance officers need a varied skillset: traits to aim for include out-of-the-box thinkers who are creative communicators, empathetic, technologically minded, and proactive. Only then, can they perform their job effectively, ensuring business conduct is ethical and employees stay abreast of relevant rules so they can respond accordingly.
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