Last week an old client called me. He wanted to discuss a risk management framework we had implemented a number of years ago. He wondered what would be the most effective approach for their transition to a Risk-Based Compliance Management System. (In this case, the word ‘system’ was used to define a set of methods, procedures and routines created to carry out specific activities, perform tasks or solve problems. Also, an organized, purposeful structure that consists of parts that continually influence one another in order to achieve the objectives of the system. I provide this definition for ‘system’, so as not mistake it for technology.)
During the course of the conversation, he explained how day to day compliance, in general, had become a struggle and was taking an inordinate amount of time, and costs were escalating.
In a discussion of more than 2 hours, I outlined for him how the highest level of effectiveness can be achieved without implementing all new frameworks or technologies. Though, I will say that technology, such as AI and machine learning can add huge value to decision making and the compliance management process. I’m sharing my ‘12 Golden Rules’ which are central to setting up a reliable Compliance Management System necessary for the new era of technology, business and regulations; post the hectic implementations of the past decade.
Compliance occurs in different parts of an organization, by different actors in varying roles and levels of responsibility. It is not just a department, it is integral to the modern way of business.
Actors in key business areas have compliance obligations. Each actor has to make a choice each time they transact or interface with a customer. They can choose to be 100% compliant or some level that is less than 100%. By most companies’ policy, compliance is not a choice, but with human nature, everything is a choice. The exposure to risk occurs when an actor chooses their free will and own moral compass to take the next step. Remember also, the lower the percentage of compliance, the higher the cost to the organization.
The following are our “12 Golden Rules” which are proven to achieve the highest level of effectiveness for a Risk-Based Compliance Management System:
Management has an imperative to execute on a compliance model that is consistent with the organization’s culture, risk tolerance/appetite, objectives, strategies and capabilities; and that will generate new value with the investments and opportunities they choose to pursue.
Uvidi Consulting works with companies that are creating innovative programs to more effectively and efficiently execute their strategies. We share our provocative thinking and pragmatic solutions that help you to Raise the Bar and Close the Gaps in your organizational capabilities.