The intricate connection between corporate culture and compliance holds significant value in today’s businesses. Every decision made by employees can potentially impact compliance.
The key to wise decision-making lies in understanding one’s role and responsibility within the organisation. In the absence of a shared understanding, accountability, and controls, firms may face chaotic compliance, eventually leading to a disorderly corporate culture.
MCO (My Compliance Office) recently delved into the intersection of culture and compliance.
It said that the significance of a firm’s leadership and its influence on a thriving compliance culture cannot be understated. Michael Rasmussen’s on-demand webinar “Beyond Wishful Thinking: How to Create a Thriving Culture of Compliance” sheds light on this, offering insights into establishing a robust framework to bolster compliance.
Defining culture within an organisation can be elusive. As expressed by GRC Pundit and Analyst Michael Rasmussen, various factors, including the firm’s global location and regional nuances, contribute to its culture. For conglomerates operating in multiple jurisdictions, understanding this becomes even more intricate. Drawing parallels with the movie Shrek, where ogres are likened to onions due to their layered nature, compliance culture too has its layers. Understanding it requires dissecting global, regional, and local cultures, combined with the overarching corporate culture, workgroup dynamics, and individual management styles.
Fritjof Capra once said, “The more we study the major problems of our time, the more we come to realise that they cannot be understood in isolation. They are systemic problems, which means that they are interconnected and interdependent.” This perspective, albeit from a physicist, can be aptly applied to corporate ecosystems, stressing how intertwined compliance and culture truly are.
How firms perceive and approach compliance is indicative of their culture. A fragmented approach, with multiple policy manuals and portals, can result in a convoluted compliance structure. The Thomson Reuters 2023 Cost of Compliance survey reveals that global financial services firms encounter 257 regulatory changes every business day from over 1200 regulators. Such frequent changes, from regulatory shifts to geopolitical uncertainties and technological updates, inevitably influence a firm’s culture and compliance.
Michael Rasmussen highlighted instances where he observed firms struggling with overwhelming policies and procedures. One medium-sized financial service firm consumed 80% of its compliance resources in merely updating documentation. Such manual processes and excessive documents sow confusion, making compliance inefficient and increasing the risk of late detection of issues.
For robust compliance, firms must revisit and streamline their policies and communication. Having a structured framework not only amplifies compliance but also fortifies the corporate culture.
Michael emphasises that clarity in policies and procedures is crucial. Policies should reflect core values and be accessible in a single portal. Diversifying policy storage can lead to inconsistencies, making it challenging to maintain a unified approach.
Employees play a pivotal role in compliance. Effective training, tailored as per job roles and risk levels, ensures that employees are well-equipped to fulfil their compliance obligations. Distinctively, Michael points out the difference between accountability and responsibility, stressing the indelible nature of accountability.
Regulators today demand concrete proof of compliance adherence. Leveraging technology can help establish a centralised compliance information hub. Automated compliance systems ensure timely communication, reminders, and provide an extensive audit trail, demonstrating adherence to policies and procedures. Such a system offers more than just regulatory compliance; it enhances the firm’s resilience and agility.
To conclude, Michael Rasmussen’s webinar also addressed the importance of investing in compliance technology. Building a compelling business case that accentuates both regulatory and business benefits can convince key stakeholders of its significance.
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