The complexity of compliance and risk exposure in doing business globally has reached an unprecedented level in recent years. In the U.S. alone, 4,000 new laws and regulations are in the works -- and that's in addition to the more than 3,500 federal regulations passed just last year. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 represented the most sweeping reform of financial regulation in the U.S. since the Great Depression. In fact, throughout the global infrastructure, many countries are expanding their compliance framework to add increasingly stringent requirements for entities doing business in their jurisdictions.
For chief compliance officers, the challenge is how to implement policies, procedures and standards that, in spite of the regulatory complexities, are easily understood by, and transparent to, employees and stakeholders. These policies, procedures, and standards must be effective in enhancing compliance and detecting and mitigating enterprise risks. And at the end of the day, the compliance function should also add value to the proper sustainability and responsible growth of the company.
Compliance best practices may be summarized by five essential elements that promote the effective understanding and awareness of enterprise risk management, while helping the company to steer clear of ethical, regulatory, and legal issues throughout the global landscape.
1. Effective Design: Straightforward and Transparent
Many organizations have voluminous binders and manuals filled with compliance or compliance-related policies and procedures. No doubt these were instituted with the best of intentions, but the reality is that they are incapable of being efficiently implemented because they can barely be understood. Disorganized and outdated, these paper-based programs are often the result of reacting to various crises and new rulemaking over the years, with little attention paid to the package as a whole.
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By: Brian Cabrera