8 Pain Points of the Compliance Officer
The compliance process has many pitfalls in a practical plane. What they are and how they can be successfully resolved with automation solutions, read in our article Dealing with the Best Compliance Management Solutions.
This time we decided to focus on the compliance challenges from the perspective of the Compliance Officer duty. We picked eight of them, which seem to us most acute. In this material, we will not speak of what a compliance officer is, what a compliance officer does, and things like compliance officer education and compliance officer certification.
First Pain Point of Compliance Officer: Pushing through the Implementation Stage
Giving a kick-start is the hardest phase. Without the full support of the company’s leadership, you will not go too far. Implementation of the standard is not just a bundle of documentation. It is about building new processes, which were not in place before.
The leadership has to prioritize compliance-related issues and transfer them to middle managers. The middle managers move it down further. It is getting harder with each level. Much is lost on the way. Compliance is not a thing you can push through, from top to bottom, as an imperative.
Pain Point #2. Compliance Officer’s Individual Risks
It very much differs from country to country. In general, the recent narrative of the regulators contains the idea of holding employees liable for corporate wrongdoing or misconduct. Due to their highly responsible positions, the Compliance Officers feel like walking on fire.
This new shift in attitude makes a prominent milestone. There have been precedents when Compliance Officers were heavily sanctioned for failing to control the organization’s compliance posture.
It is not only about keeping the organization safe. The existing governance structure and prevailing attitudes may be a major obstacle to getting things properly done. The reputation of Compliance Officers is at stake. The looming risk of becoming a scapegoat and being fired adds a little comfort to their seats.
Paint Point #3. Growing Workload and Limited Resources
As someone wittily mentioned, we need more and more people to do even less work. The downside of this trend reflects in the budgeting. Instead of adding staff to meet their compliance needs, some organizations demand from Compliance Officers to “move hills” with less labor force.
These organizations do not fully realize the balance between compliance cost and non-compliance consequences. Getting funds for keeping the compliance department up and running becomes a daily struggle. Compliance seems the least priority if things go all right. When a bad accident occurs, it entirely becomes Compliance Officer’s fault. Nobody cares how hard he tried to push the burning issues through the desks and boardrooms.
Pain Point #4. Increased Penalties and Fines
In the age of massive digitalization and further expansion of connected devices, the exposure of the entire society to cyber threats critically grows. This is one of the reasons regulators increase their requirements for security.
Hefty penalties and fines for non-compliance change the landscape of the IT industry. Some time ago, penalties were an affordable price for doing business. Now, the fines and reputational risks outweigh the cost of implementing well-built compliance systems.
Improving compliance takes a lot of effort and translates into a higher cost. Compliance Officers have to fight the resistant opinions in the boardroom trying to convince the leadership in the necessity of such investment. Often to no avail. As a result, if a penalty occurs, they are first to blame.
Pain point #5. Lack of Compliance Culture
Compliance Officers have trouble delivering the bad news to the board of directors. When you have 15 minutes twice a year to report, raising tough issues requires courage. Everyone wants to shine. If painful part kept reserved, senior staff would think all to be fine and there is no need for action.
On the other hand, compliance alerts and initiatives can find no support in company divisions. Without understanding the proper place of compliance in the company, employees tend to ignore it. You cannot inject it into their minds.
Compliance principles should go the same lines as the Code of Conduct and Ethical Business Practice. Implementing compliance culture across the entire organization is a long-term process. Before it is in place, Compliance Officers experience additional pressure from underestimation and lack of support.
Pain Point #6. Massive Migration into Social Media and Messengers
We live in the age of unified communications. New means and tools for connecting people are born almost daily. The population promptly adopts instant messaging and social media networks. The traditional phone calls and emails are going in the past.
New regulations require keeping a record of all transactional electronic communications. From a technical point of view, it is not a problem. However, when employees use their own devices for processing the company’s sensitive information, it poses a serious challenge for Compliance Officers. For example, many software development companies practice a Bring-Your-Own-Device (BYOD) policy. The security of proprietary information stored on personal devices is out of control. This situation gets worse when employees handle personal data via their own gadgets. This poses a serious privacy risk. Writing prohibiting policies does not work. Employees often ignore them or openly protest. Supervising everybody’s communications at work is costly. It is also very uncomfortable in terms of corporate climate.
Pain Point #7. Keeping Pace with Current Technology
Handling enormous amounts of data requires advanced technology. The trick is that the most advanced tools on the market fast become a regulatory expectation. With legacy systems, you are not able to catch up with the growing requirements.
Compliance technologies are changing fast. Some engage in artificial intelligence and other emerging technologies. Compliance Officers are not supposed to be technology experts. The integration of new systems is a big concern. Ensuring that all cyber risks are properly addressed with every innovation becomes a heavy task.
Pain Point #8. Ever-changing Regulatory Landscape
We deliberately put this point to the last place on the list. Regulatory change is the most known compliance issue. Keeping track of local regulations takes its due. Business transactions cross the borders. This adds another burden onto the Compliance Officer’s shoulders to monitor, know and satisfy regulations of other jurisdictions. This point closely relates to the compliance officer education and their
As an Afterthought
One day, the decision on the implementation of a standard comes out of the boardroom. What to start with?
It is important to outline the exact area and scope of the standard application. A transnational company with branches all over the world has to maintain compliance across many jurisdictions. On the contrary, a small company acting on a local market finds enough to cover a few of its most prominent processes.
In addition to security and privacy compliance, organizations have to comply with industry-specific standards. Transition to another industry can be a challenge for the Compliance Officer.
Some of the pain points above are inherent to the organization. For example, underfunding or lack of compliance culture. Regardless of specializations like Safety Compliance Officer, Compliance Officer, or Corporate Compliance Officer, addressing these issues demands from the Compliance Officers much courage, time and effort.
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