Tuesday, March 9, 2021
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Articles
    • See All Articles
    • NEW: COVID-Related
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Leadership and Career
  • Vendor News
  • Jobs
    • Compliance & Risk
    • Information Security
  • Events
    • Webinars & Events
    • Submit an Event
  • Downloads
    • eBooks
    • Whitepapers
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Articles
    • See All Articles
    • NEW: COVID-Related
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Leadership and Career
  • Vendor News
  • Jobs
    • Compliance & Risk
    • Information Security
  • Events
    • Webinars & Events
    • Submit an Event
  • Downloads
    • eBooks
    • Whitepapers
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Compliance

Successful Compliance Depends on Valuing the Talents of Compliance Professionals

by Jerry Shafran
March 25, 2014
in Compliance
Successful Compliance Depends on Valuing the Talents of Compliance Professionals

Compliance encompasses a broad range of ongoing activities across all departments or divisions within a company to meet legislative and regulatory requirements. Enlightened organizations regard compliance as a useful, ethically-driven business practice and an honorable profession that exists for the mutual benefit of the company and its customers, while unenlightened companies take a different view.

Those businesses, to their detriment, view compliance as a function that requires attention only when it needs to be “fixed.” Instead of investing in compliance, they invest in fixing non-compliance.

Given the increasingly high cost of litigation and the increasing premium that employees and customers place on integrity, companies that value compliance are often highly desirable places to work and are more competitive in the marketplace.

Asset or Cost?

Whether a company regards compliance activities as an asset or a cost depends on its corporate culture. In weighing the value of compliance versus non-compliance, it may cost a mid-sized insurance carrier hundreds of thousands of dollars to prepare for market conduct examinations and pay for examiners’ per diem expenses. Those outlays pale in comparison, however, to the millions of dollars in fines the company could face for non-compliance related to claims, forms, underwriting or licensing.

Taking proactive steps to be in compliance, including investments in skilled compliance professionals, has been shown repeatedly to be a more effective strategy than fixing non-compliance by taking remedial actions.

For an organization to be successful in managing its compliance activities, the culture must reflect a continued willingness to go “above and beyond” the letter of any given law or regulation. Such treatment includes:

  • Regarding compliance professionals as valued members of the team rather than as hindrances to accomplishing business goals
  • Abandoning the traditional mindset of relegating compliance professionals to “dark corners” of the office
  • Acknowledging that compliance activities consist of much more than “reactions to complaints” and “doing the minimum to cover ourselves in an audit”
  • Using intranet and social media to help change employees’ attitudes toward compliance

Companies that value compliance tend to be organizations that foster deep loyalties with customers and employees.

Effective Strategies and Tactics

There are many ways for top and senior management to demonstrate the value they place on compliance. Those actions consist of:

  • Including the Chief Compliance Officer (CCO) in top-level decision-making
  • Praising the work of compliance professionals by sending e-mail blasts companywide
  • Writing letters to personnel files
  • Acknowledging successful market conduct examinations much like “sales wins” are celebrated
  • Rewarding compliance professionals with golf outings, travel and other perks for outstanding contributions to the organization
  • Allowing CCOs and their subordinates to participate in Board meetings or senior management meetings
  • Holding luncheons or assemblies to recognize the contributions that compliance professionals make to the organization
  • Channeling employees’ competitive desires into contests related to compliance matters (gamification)

After management has established the importance of the CCO, companies can benefit from dividing compliance responsibilities among business units rather than making the compliance department solely responsible for compliance activities.

Assigning compliance responsibilities to “leaders” or “rising stars” in various business units who work closely with their compliance department colleagues, rather than delegating responsibilities to less capable individuals who “have extra time,” can help to ensure that compliance is valued organization-wide.

The benefits of compliance activities are shown clearly in a survey conducted by the American Bar Association’s (ABA’s) Open Compliance & Ethics Group. The findings revealed that, for every $1 billion in revenue, the cost of compliance is $6 million, or 0.006%. Therefore, to be in compliance, companies do not need to spend large amounts of money relative to the incomes they generate. Nevertheless, many organizations need to step up their compliance spending to avoid the larger expenses of fines and penalties they face for non-compliance.

Companies that fail to invest in compliance programs often pay heavy fines.

In 2010, a prominent insurance carrier was fined $100 million for under-reporting the value of the premiums it sold to customers. Eight years earlier, another leading carrier was fined $4 billion for unlawful sales practices. Most typical, though, are smaller fines ranging from $1,500 to $1.5 million.

Regardless of dollar amounts, non-compliance usually results in a revenue loss for the company and also damages reputation. (i.e., how employees, customers and other stakeholders perceive the company) Although the reputational effects of violations may be difficult to quantify, one thing is certain: multiple studies have shown that it is less expensive to invest in compliance than it is to litigate and pay fines or penalties.

In the insurance sector, for example, causes of non-compliance include:

  • Multiple sets of ever-changing complex regulations across the jurisdictions of all 50 states, the District of Columbia and Puerto Rico
  • Economic pressures that have resulted in the acceptance of lower underwriting standards, increased volumes of mergers and acquisitions and ventures into new product lines and markets, all of which increase compliance risk
  • Labor-intensive, inefficient processes for managing compliance activities

Violations concern a wide variety of practices and procedures and are committed by companies of all sizes. A common breach involves annuity suitability requirements. To reduce the number of violations, it is incumbent upon carriers to treat their compliance activities with the same level of meticulousness they devote to other aspects of their operations, including claims, compensation and sales.

Positive Motivation

Given the high cost of litigation, smart management teams invest significant resources in making certain the entire organization is operating within the guidelines of applicable regulations and laws.

Smart executives also know that “doing the right thing” is always better in the long run because it:

  • Strengthens financial performance
  • Bolsters employee morale
  • Builds reputation

Among  Generation Xers and Millennials, reputation is of critical importance. Compared to earlier cohorts, these 20- and 30-somethings expect their employers to always operate with integrity and foster excellence using a “carrot” rather than a “stick.”

Having weathered The Great Recession, employees and customers in all age groups are increasingly receptive to working for, or doing business with, organizations that value integrity.

Almost every company contends that “people” are its most valuable asset, but only an organization that invests continually in the talents of compliance professionals is qualified to make that claim with any degree of truthfulness.


Tags: corporate governance
Previous Post

Risk Assessment – By the Book

Next Post

Companies are Missing Opportunities to Mine Big Data to Reduce Fraud Risk and Improve Anti-Bribery Compliance

Jerry Shafran

Jerry Shafran headshot 3-25-14About the Author Jerry Shafran is CEO and founder of Compliance Assurance Corporation (CAC). The Pittsburgh-based company is a division of StoneRiver Risk and Compliance that delivers highly-integrated solutions which automate and simplify tasks related to compliance in the insurance industry, including regulatory change management, consumer complaint management, regulatory filing, market conduct exam management, and policy and procedure management. Prior to establishing CAC in 2005, Mr. Shafran founded Ceeva, Inc., a provider of technology management services for businesses and not-for-profit organizations. He has more than 25 years of experience as a technology entrepreneur, and in technology sales, business development and business management.

Related Posts

The Power of Artificial Intelligence in Financial Services Compliance

The Power of Artificial Intelligence in Financial Services Compliance

March 8, 2021
illustration of man under giant gavel

BitPay’s $507K OFAC Sanctions Violations Settlement

March 4, 2021
Thinking Outside the Tick Box

Thinking Outside the Tick Box: Compliance Training as a Competitive Advantage

March 3, 2021
The facade of the SEC in Washington, D.C.

Prepare Now to Comply with SEC’s Updated MD&A and Related Financial Disclosure Requirements

March 3, 2021
Next Post
Companies are Missing Opportunities to Mine Big Data to Reduce Fraud Risk and Improve Anti-Bribery Compliance

Companies are Missing Opportunities to Mine Big Data to Reduce Fraud Risk and Improve Anti-Bribery Compliance

OneTrust offers download to demonstrate privacy management leadership
Access realtime data
Top 10 Risk and Compliance Trends

Special Coverage

Special COVID page graphic

Jump to a Topic:

anti-corruption anti-money laundering/AML Artificial Intelligence/A.I. automation banks board of directors board risk oversight bribery CCPA/California Consumer Privacy Act Cloud Compliance communications management Coronavirus/COVID-19 corporate culture crisis management cyber crime cyber risk data analytics data breach data governance decision-making diversity DOJ due diligence ESG fcpa enforcement actions financial crime GDPR GRC HIPAA information security KYC/know your customer machine learning monitoring ransomware regtech reputation risk risk assessment Sanctions SEC social media risk technology third party risk management tone at the top training whistleblowing
No Result
View All Result

Privacy Policy

Follow Us

  • Facebook
  • Twitter
  • LinkedIn
  • RSS Feed

Category

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Whitepapers

© 2019 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
  • Articles
  • Vendor News
  • Podcasts
  • Videos
  • Whitepapers
  • eBooks
  • Events
  • Jobs
  • Subscribe

© 2019 Corporate Compliance Insights