Compliance is not easy. Organizations across industries have global clients, partners, and business operations. Adding to the complexity of global business, today’s organization is dynamic and constantly changing. The modern organization changes by the minute. The dynamic and global nature of business is particularly challenging to compliance management.
As organizations expand operations and business relationships (e.g., vendors, supply chain, consultants and staffing) their risk profile grows exponentially. To stay competitive, organizations need systems to monitor internal risk (e.g., strategy, processes and internal controls) and external risk (e.g., legal, regulatory, competitive, economic, political and geographic environments). What may seem insignificant in one area can have profound impact on others.
Compliance activities managed in silos often lead to the inevitable failure of a compliance program. Reactive, document-centric, siloed information and processes fail to manage compliance, leaving stakeholders blind to the intricate relationships of compliance across the business. Management is not thinking about how compliance processes can provide greater insight. This ad hoc approach results in poor visibility across the organization and its control environment.
A non-integrated approach to compliance management results in these phenomena, each one feeding off the last:
- Redundant and inefficient processes. Managing compliance in silos hinders big-picture thinking. Little thought goes into how resources can be leveraged for greater effectiveness, efficiency and agility. The organization ends up with a variety of processes, applications and documents to meet individual compliance needs. The result: a major drain of time and resources.
- Poor visibility across the enterprise. Siloed initiatives result in a reactive approach to compliance. Islands of information are individually assessed and monitored. Departments are burdened by multiple risk and compliance assessments asking the same questions in different formats. Limited visibility across the risk landscape ensues.
- Overwhelming complexity. The lack of integrated processes introduces complexity, uncertainty, and confusion. Inconsistent processes increase inherent risk, more points of failure, and more compliance gaps leading to unacceptable risk. Mass confusion reigns for the organization, regulators, stakeholders, and business partners.
- Lack of agility. Reactive risk and compliance strategies managed in information silos handicaps the business. Bewildered by a maze of approaches, processes and disconnected data, the organization is incapable of being agile in a dynamic and distributed business environment.
- Greater exposure and vulnerability. When compliance is not viewed holistically, the focus is only on what is immediately in front of each department, at the expense of enterprise-wide co-dependencies. This fragmented view creates gaps that cripple compliance management and a business ill-equipped for aligning compliance initiatives to business objectives.
Success in compliance management begins with a strategy that addresses how an organization can effectively manage compliance across the organization. When accountability and compliance are effectively managed, with a system of record to identify and track diverse issues, an effective framework forms.
Past compliance processes were bogged down in documents and technology silos, which led to laborious and costly processes to gather information and report on compliance risk. Compliance departments over-relied on spreadsheets, documents, and email that lacked an audit trail, creating a legal disaster since organizations lack a defensible position when it cannot prove compliance.
With no record, assessments can also be compromised or tampered with. What may seem like an insignificant risk in one source of information may have a different appearance when other relationships are factored in.
Siloed documents and processes create inefficiency, out-of-sync controls, and corporate policies that are inadequate to manage risk and compliance. Organizations are encumbered by unnecessary complexity because they manage compliance within specific issues, without regard for an integrated framework and architecture, wasting time and resources in the process.
Effective compliance requires technology that has a robust system of record that proves a state of compliance and documents any changes made, thus providing a complete audit trail. In order for compliance to be an active and living part of the organization and culture, intelligent organizations are implementing a comprehensive compliance technology architecture.
A compliance technology architecture to support compliance risk management includes capabilities to perform:
- Compliance risk management. Technology to manage compliance risk surveys, assessments, and related risk information; report, analyze and model risk of compliance and ethics.
- Regulatory change management. Technology to track, document and manage regulatory changes and their business impact.
- Policy and procedure management. Technology that maintains policy lifecycle management across development, maintenance, communication and attestation. Provides a robust audit trail and content management capability to ensure policies are current and communicated.
- Investigations management. Technology that enables incident management, facilitates collaboration, and documents investigation processes. The ability to record the range of issues reported from all mechanisms, actions taken, and results of the investigation.
- Issue reporting. Technology that makes it easy for individuals to report issues and non-compliance, including a system to document reports made directly to all levels of management.
- Survey and assessment. Technology that delivers a consistent experience for conducting compliance surveys and assessments.
- Benchmarking, metrics, and dashboarding. Technology that produces reports of assurance to management that compliance is not only designed properly but also operating properly to address compliance risks in a dynamic business environment assure executives and the board that their fiduciary obligations for compliance are being met.
- Due diligence management. Technology that facilitates due diligence efforts to validate the hiring of the right people and partnering with ethical vendors that share the same commitment to compliance and corporate values.
- Forms automation and processing. Technology that creates and automates forms to manage processes such as interactions for gifts, entertainment, and facilitated payments through online forms, plus workflows for approval/disapproval.
- Compliance program/project management. Technology that brings compliance risk management together in a cohesive system to manage compliance activities, metrics, and reports. All compliance management personnel and employees should have access to the system and see the relevant tasks that pertain to their job.
Business requires a common compliance risk management process, information, and technology architecture that is context-driven and adaptable to the enterprise and operational risk management strategy. Compliance must be an active, living part of the organization and culture that can detect and prevent issues as a continuous process to be monitored, maintained and nurtured in the context of governance, risk, and compliance management. Today’s organizations require integrated compliance risk management strategies as an integration function for effective enterprise risk management.