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The demands on compliance have potentially resulted in the function struggling to clearly articulate its role within financial services organizations and how it can benefit the chief executive officer (CEO).
According to the Accenture 2016 Compliance Risk Study, the majority of compliance officers retain a direct reporting line to the board of directors or CEO. However, this number appears to be falling, a stark contrast with the last two years when more and more compliance officers were winning that seat at the CEO’s table. To maintain its role as a key strategic advisor to the business, compliance needs to better understand and communicate its value as a risk management function.
Traditionally, the key priorities for a financial services CEO have fallen into the areas of revenue generation, cost effectiveness, and reputation. By this standard, compliance is facing challenges to perform as a strategic partner to the business. This is highlighted by the fact that only 31 percent of compliance functions represented by our 2016 Compliance Risk Study respondents now report to the CEO (representing a 9 percentage-point fall over the 2014 level).
The Accenture study found even a sharper drop in the number of FS compliance officers reporting directly to the board of directors: from 38 percent in 2015 to 28 percent in 2016.
Furthermore, three in four survey respondents said they would re-scope responsibility for execution to other functions.
Based on these survey findings, a key strategic priority for compliance will be to sharpen the remit of its activity, and its relationships with other first- and second-line functions, for example Operational Risk, Human Resources, and Technology.
Better understanding and improved communication of its value as a risk management function and its role within the broader enterprise-wide risk management framework will be critical to compliance continuing to develop its stature within the financial institution.
To learn more, register to download the report: Compliance at a Crossroads: One Step Forward, Two Steps Back?