The regulatory landscape changes continuously, with new laws, regulations, and guidance creating constant challenges for all colleagues, not just those ultimately responsible for Risk and Compliance. And as regulatory bodies crack down, the cost of non-compliance rises. So how do you mitigate the risk? Is the answer culture?
A cultural shift
To create a culture of compliance which is truly embedded, it can no longer be a them and us mentality. A shift needs to happen, and the tone must be set from the very top of the organisation, ensuring leaders are aligned and committed to a compliance culture.
Given the sheer magnitude of regulatory compliance combined with the shift towards outcomes focus, compliance teams can no longer run in isolation. To be effective, they need to work closely with all areas of the business and really understand the strategic goals and priorities. The level of regulatory scrutiny is continuing to grow through things like the consumer duty and the increase in financial crime risks, which means compliance is no longer seen as a burden or something we “have to do”. Instead, it’s become a unique selling point that can help companies win and retain customers by providing them with fair and frictionless journeys. Businesses like ours are recognising the value that compliance brings to the table. According to Deloitte and Forbes “customer-centric companies are 60% more profitable than companies that don’t focus on customers”.
Adding value, proactively
This change in the way compliance is perceived has had a positive impact on compliance professionals and how they approach their work, with the pendulum swinging from reactive oversight to searching for proactive value add opportunities. This requires a deep understanding of the company's operations and processes, as well as the ability to identify and mitigate risks before they become a headache.
To gain this level of collaboration and partnership, compliance teams need to establish trust with the business. This means being transparent about their processes and decision-making, as well as communicating in a way that is both clear and easy to understand. Compliance teams also need to be flexible and adaptable, able to pivot quickly to changing business needs while still maintaining their core principles. At Target we’ve moved our compliance and risk teams to a business partnering model, which really helps us to get close to our colleagues across the business. This means we’re involved earlier in new product or service design, making sure the customer is at the heart of our offerings and also allowing us to deliver change more effectively. Crucially, it also means people across Target know who they can go to for compliance and risk support with new ideas or problem solving.
The technology enablers
Reg tech and automation also has a key role to play. As compliance becomes more complex and data-driven, companies need to invest in tools and systems that can help them stay on top of regulatory requirements and help identify any potential risks. Through automation, compliance teams can focus on higher-level strategic work, rather than getting bogged down in administrative tasks.
Ultimately, the goal of this shift in culture is to create a true business partnership between compliance teams and the rest of the organisation. Compliance teams should no longer be seen as an obstacle to growth, but rather as a critical component of success. By working together, businesses can ensure that they’re meeting their regulatory obligations while still achieving their strategic objectives and delighting their customers.