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Compliance’s Seat at the Table – Hard to Earn, Hard to Retain

Compliance’s Seat at the Table – Hard to Earn, Hard to Retain

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Published by Accenture
According to Accenture’s new study titled "Compliance’s Seat at the Table – Hard to Earn, Hard to Retain," compliance risk management in the banking and capital markets sectors has grown in size and stature in the wake of recent industry events. The key concern now is whether such growing importance has achieved the required shift in behaviors. Can compliance programs sustain the investment required to maintain their seat at the table and become a true strategic business partner?
According to Accenture’s new study titled "Compliance’s Seat at the Table – Hard to Earn, Hard to Retain," compliance risk management in the banking and capital markets sectors has grown in size and stature in the wake of recent industry events. The key concern now is whether such growing importance has achieved the required shift in behaviors. Can compliance programs sustain the investment required to maintain their seat at the table and become a true strategic business partner?

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Published by: Accenture on Mar 07, 2014
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05/15/2014

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Compliance’s Seat at the Table – Hard to Earn, Hard to Retain
 
Accenture 2014 Compliance Risk Study
 
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New research from Accenture confirms that compliance risk management in the banking and capital markets sectors has grown in size and stature in the wake of recent industry events. The key concern now is whether such growing importance has achieved the required shift in behaviors and whether compliance programs can sustain the investment required to maintain their seat at the table and become a true strategic business partner.Accenture’s 2014 Compliance Risk Study – based on surveys with compliance officers at 100 banking and capital markets firms across Europe and North America – indicates that compliance risk management is at a critical juncture in its evolution toward a control function that is relevant and can establish long term stature and respect within financial service organizations. Five key themes emerged from our study, including
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:
1. The size and shape of compliance programs continue to evolve.
Compliance has made significant progress in increasing its stature and role within the organization. A majority of compliance programs now report directly to the Board or the Chief Executive Officer (CEO), but there remain challenges in driving influence as strategy and processes are still relatively immature.
2. Further investment in compliance is needed to achieve strategic goals.
Investment in compliance shows no sign of slowing, with firms in Europe and North America both viewing analytics and risk modeling as a focus for current investment to help predict and mitigate future compliance events.
3. The competition for talent has become a barrier to success.
Securing sufficient compliance talent will be key to addressing sources of financial and reputational damage to an organization. Firms need to re-think identification, recruitment and, especially, retention of talent in a fiercely competitive market environment.
4. With a “perfect storm” brewing in compliance, firms need to demonstrate effectiveness and think beyond traditional solutions.
As they confront both a growing need to invest and a scarcity of talent, firms need to re-think their growth plan so they can help ensure long term sustainability, help maximize human capital and demonstrate their success.
5. The horizon is continually moving, and compliance programs are already setting priorities for the future of their compliance function.
Proactive, strategic planning by compliance programs will be critical to building and maintaining competitive advantage. In addition, programs need to adopt a global mindset that reflects local priorities as they plan for the skills and technology required to sustain their development.
 
DETAILED FINDINGS FROM THE ACCENTURE 2014 COMPLIANCE RISK STUDY
1. The size and shape of compliance programs continue to evolve.
The proportion of compliance programs reporting to the Board or the CEO is a key indicator of compliance’s stature as a control function that can escalate effectively and ensure accountability for actions. As seen in Figure 1 below, nearly one-third (31 percent) of respondents state their compliance programs report to the Board, with another 40 percent reporting to the CEO. The growth in stature is considerable given that just over five years ago 70 percent of respondents’ compliance programs had not yet been formally chartered.A key next step for compliance is to gain the stature and authority to influence appropriate behaviors across the organization including responses to mandates from senior management or regulators where required. This may not be easy to accomplish, as 60 percent of respondents still see a need for improvement in establishing a culture of compliance in their firms while 65 percent of respondents feel that they needed to improve their response to and relationship with regulators. Compliance programs are therefore at an important inflection point in delivering on their rising status within the organization.
The Wall Street Journal
has noted that while a greater number of compliance leaders are reporting to their chief executive, there remain challenges ahead for programs as their new-found stature is embedded within the firm
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. The stakes for compliance’s role in firms’ decision-making have been raised, and programs need to respond accordingly.
WHICH OF THE FOLLOWING BEST DESCRIBES THE COMPLIANCE FUNCTION’S REPORTING LINES?
GLOBALNORTH AMERICAEUROPE
DIRECTLY REPORTING TO THE CEODIRECTLY REPORTING TO THE BOARD OF DIRECTORSREPORTING TO HEAD OF LEGAL WHO REPORTS TO THE CEOREPORTING TO HEAD OF ANY OTHER FUNCTION WHO REPORTS TO THE CEO
Base Size = Total Sample (n=100), where NA=50 and Europe=50Source: Accenture, March 2014
40%31%21%8%34%30%26%10%46%32%16%6%
FIGURE 1. COMPLIANCE REPORTING LINES
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