In recent years, the function’s stature within the organization was growing, with compliance leaders landing a seat at the leadership table. But this year’s study points to challenges on this front. Only 31 percent of the leaders represented in our study report to the CEO. That’s a 9 percent drop from our 2014 study. Why the decline?
Compliance leaders face more barriers as they work to balance their advisory role while still maintaining an objective control function. Sixty-three percent of study respondents think increased front-line strength for the function might mean a decrease in the function’s independence.
The key for compliance leaders is to manage a blurring of that line between the function’s advisory and control roles, and thus promoting a strong first and second line of defense. Building strong relationships with other first- and second-line functions, such as Operational risk, Human Resources and Technology, can help Compliance fine-tune its own abilities.
Also important will be refining compliance’s role as a risk management function—and scoping that role within all the enterprise-wide risk management activity.
Finally, an important priority will be building a better understanding of changing customer expectations. Cultivating this kind of knowledge can propel compliance into supporting front office processes such as product design, sales and distribution, or new business development.