The Role of a Compliance Officer

Every business acts under the scrutiny of both internal and external regulations. While managing day-to-day operations, it’s imperative to stay on top of what is and is not allowed to avoid the detrimental effects that come with compliance risk. That’s why it may be worthwhile to invest in a compliance officer. To be even more secure, it is advisable to couple the skills of a human being with that of an automation tool to save you time, money and protect your business in both the short and long term.

Coming Up

1. What is Compliance Risk?

2. What is a Compliance Officer?

3. Why is Compliance Officer Important?

4. What is the Job Description?

5. How to Hire a Compliance Officer

6. Automation to Reduce Compliance Risk

7. Compliance Matters, Be Prepared

What is Compliance Risk?

Compliance risk is the legal and financial penalties that are associated with breaking an internal or external piece of legislature or rule. Rules and regulations must be clearly stated with the effects of not complying clearly outlined so that businesses can manage operations accordingly.

While risks vary by business, some examples of compliance risk can include the failure to report suspicious transactions on behalf of a financial institution, the inability to conduct proper due diligence on a new client or an inherent risk like failure to protect your employees from harm or harassment.

Compliance risk has real consequences that not only can damage your business’ reputation but can also be as severe as losing your business. With financial impact, legal impact, business impact and reputational impact, the role of a compliance officer could be vital in protecting your business from compliance risk.

Across all industries, compliance risk can come up in multiple ways, such as:

Data protection:

Big data is always increasing, and as such, it’s at the hands of businesses to protect customer information and adhere to laws like GDPR when collecting and storing data.

Market risk:

Risk in the industry can affect a business’ practices such as laws, regulations and industry requirements.

Corruption:

Within an organisation, it becomes the responsibility of a business to ensure that their employees do not take part in corrupt acts such as bribery, blackmail or insider trading.

Quality:

Failure to comply with the standards set forth by the government in terms of upholding product or service quality could result in product seizure or shut-down as well as dealing with complaints correctly.

That’s only a few of a long list of threats facing businesses, so knowing how to manage compliance risk is critical. To understand the risk of not complying, think about the following - major companies have fallen victim to data breaches, including Google, Facebook, Quora and Orbitz. Despite the result that the data of millions of consumers is compromised, the fines are massive as well. For example, Facebook faces a multi-billion dollar record fine. No matter the size of your company, unsophisticated data protection causes harm for everyone involved and has substantial financial repercussions.

What is a Compliance Officer?

A compliance officer ensures that a company complies with its outside regulatory and legal requirements, as well as internal policies and bylaws.

To be successful, compliance officers must fully understand the business’ goals, as well as the broader industry standards. A compliance officer must fully grasp the standard business law and surrounding rules and regulations to be able to create procedures and stop-gaps to protect the business. Not only will a compliance officer need to know this information, but (s)he will also have to create a strategy to make sure that the data is communicated and understood by everyone within the organisation.

Compliance has to become part of the company culture so that no single individual can cause disruption.

Why is Compliance Officer Important?

Compliance risk is a complex subject as it varies by industry and also changes with the political and economic environment. While internal compliance may seem easier to manage since it is set up within the organisation, it also is not always a black and white issue. That’s why having a dedicated individual who is responsible for such oversight can be beneficial.

Additionally, a compliance officer helps a business:

• Manage risk
• Maintain a good reputation
• Avoid lawsuits

What is the Job Description?

The role of a compliance officer may have nuances within different industries, but for the most part, a compliance officer is tasked with the following:

• Setup and manage the compliance program
• Carry out Audit procedures regularly
• Monitor the market, laws and industry for changing compliance requirements and needs
• Assess company operations to determine compliance risk
• Work with management and staff to identify and manage regulatory risk
• Resolve employees concerns about compliance
• Put in place and enforce disciplinary procedures in case of breach
• Review company policies

How to Hire a Compliance Officer

There is no doubt that a compliance officer should be a trustworthy person with a responsible character. Some other inherent traits to look for when hiring your compliance officer include: ethical, pragmatic, intelligent, proactive, fair, modest and diligent.

Automation to Reduce Compliance Risk

While a compliance officer offers a solid start to reducing compliance risk, it is not the only measure that can be taken. Although human beings provide high value to an organisation in terms of lessening compliance risk, there can be missed steps or bias that can affect the process. There can also be a lack of transparency or security in the data, or a lack of oversight and analysis to recognise compliance breach or implement controls to stop violation. That’s why automation tools can also be of excellent service to a compliance officer and staff in reducing compliance risk.

For example, human analytical automation tools can help lower compliance risk by automating reports that are needed to adhere to regulations. To showcase within the banking industry, these tools can provide capital adequacy reports for regulators when it comes to big data and controlling information especially when it’s on many different legacy systems, humans need the help of data automation software.

It may seem to be enough to have everyone on board with compliance and processes that adhere to regulations, but when it comes to data, relying solely on individuals can cause unintended harm. It becomes extraordinarily complex when laws change and relying on staff education to remember and enforce those changes. With automation tools, you can automatically reduce the risk of human error. And, this is especially important in a time where data continues to expand and multiply rapidly. Automation tools save time and money and maintain processes of reporting and data cleansing and maintenance without any human interference.

By using automation, the operational benefits paired with the knowledge of human resources create a dynamic system that is strategic, accurate, proactive and ultimately, the best weapon for a compliance officer to combat compliance risk.

Compliance Matters, Be Prepared

To protect your business, no matter the industry, a compliance officer can oversee the internal and external environment to provide all that is needed to comply with rules and regulations. To enhance their powers by combining an automation tool with a compliance officer, you can significantly relieve the burden of compliance risk and allow your employees to focus on the tasks at hand that they were hired to perform.