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Are compliance officers good board material?

Written by Jonathan Dempsey, MBA on Tuesday June 22, 2021


Outside of our profession, a common frame of reference for compliance is the historical context of enforcing rules and regulations – compliance officers as the guardians of policy and process. Through this older lens, asking whether a compliance officer would make good board material bears similarities to a previous blog, which asked whether a compliance team can change a firm’s culture; the idea being that, even if we could, is it something we really wanted to achieve?

Yet in 2021, there exists a new paradigm. Fragmented economies, shattered industries and restrictions on travel; greater access to mobile technology, global movements on climate change and diversity and #GenZ’s entrepreneurialism; the growth of the (largely) unregulated gig economy, ‘work anywhere’ policies and increased demand for purpose-driven brands – each and every one is a seismic shift that has either proliferated or emerged within the last 12 months. In response, firms of all stripes must adapt and reimagine the value of influencing success, both within their organisation and within society. Remaining static is complacency and will be punished by the market.

This mini-series has explored the vitality, passion and motivation of those entering the compliance profession, whether as a first or second career, during this turbulent period. Compliance is perfectly primed to adapt, with the ability to influence change in a culture as part of integrated and innovative approaches to risk management. In this restless political, economic, social, technological, environmental and legal landscape, what is possible is being reassessed to create a highly-valued compliance profession – one characterised by creativity, curiosity and care, which collaborates and unlocks value for technological innovation.

Are compliance officers good board material?

Notwithstanding the variance in public, private and charitable groups and across industrial sectors, it’s possible to discern the characteristics of what a good board member might look like, which will likely include the following criteria.

1. Being comfortable dealing with intangibles such as organisational politics, ethics, brand, reputation management and handling the competing priorities of stakeholders. A successful board member will understand what enhances brand and destroys reputation. In 2021, diversity, inclusion and equity remain pertinent areas for examination.

2. Leadership, role modelling and communication of the organisation’s values and desired behaviours, as well as taking full accountability. This requires high levels of emotional intelligence and personal resilience.

3. Collectively ensuring commercial viability of the business to achieve strategic goals through a balance of risk taking, governance and problem solving as part of the executive team.

4. Horizon scanning – the ability to assimilate complex business intelligence and make decisions based upon long timeframes and external factors within the operating environment.

5. A CEO, in particular, must possess the ability to create a clear and compelling vision, setting the direction for the business. They are ultimately responsible for compliance activities, for instance, they sign the organisation’s written health and safety policy statement in the UK. Such a policy is often the basis for management systems which govern the operations of the business.

It’s worth thinking about whether or how a compliance officer could provide or develop these qualities, and whether they might make a good (or even an excellent) board member.

If we begin with an open mind, it’s tempting to conclude that, given everything that has happened over the last year, there’s no reason why not.

It’s natural to expect that most people who operate within an executive team are self-motivated and relatively ambitious, having grown in areas of expertise which are valuable to the organisation. They are also likely to have undertaken personal and professional development (formal or otherwise).

Compliance: People over policy

Compliance and risk management are integral to ESG (environmental and social governance) so these portfolios and their impact on business are understood by compliance professionals. Personal and professional integrity is inherent within their roles so collaborating cross-functionally, this will naturally manifest itself. Whilst multimillion pound contracts can be won or lost on the ability of a business to demonstrate ESG performance, these are perhaps more transactional parts of a compliance team’s roles through management of systems. Therefore, areas for development for aspirational officers are likely to be commerciality, strategic thinking and an emphasis on ‘people’ over ‘policy and practice’.

There may be a natural (and understandable) tendency for compliance officers towards risk aversion. But this can be countered by understanding financial mechanisms and opportunities for growth. Equipped with insight on what governance is not required can be a valuable asset in ‘designing in’ agile and adaptable frameworks to unleash value rather than erode it.

Whether the aspirational role is chief compliance officer or a more commercially-oriented chief risk officer partially depends on the organisation and sector. The increasingly dynamic economy will create new opportunities which may reside in smaller and more entrepreneurial businesses. Either way, executive-level appointments for the reimagined compliance officer are becoming a reality.

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