A culture of compliance is one of the most important things to foster within your practice as without it, the firm will be open to all kinds of risks, which if left unmitigated could result in catastrophic losses to the firm, including loss of clients and revenue as well reputational damage.
At the heart of your compliance culture you need a slick compliance operation led by a forward thinking COLP and COFA. When measuring the effectiveness of your compliance operations it is worth using a metric called ‘return on investment’. By asking what the compliance return on investment is when making risk and compliance decisions firms will start treating compliance as a value creation activity that lies at the heart of business strategy. Compliance touches on all areas within a practice and well applied risk management strategies can have a huge impact on the firm’s bottom line.
There are numerous situations within a practice that call for looking at things through the lens of compliance return of investment (CROI). Where there are inefficient processes and a lack of centralised control there will be human error; in these instances you are likely to find breaches of the code of conduct, wasted resource due to paper based systems as well as a whole range of future risks. Compliance officers need to look at the overall cost of the current way of doing things within their firms and then look at ways in which they can be improved to deliver greater savings, improved efficiency and reduced human error.
Spending money on compliance tools, services and software is a good investment so long as they deliver the efficiencies expected. When it comes to compliance, ultimately your firm’s reputation is at stake. Without a good reputation a firm will have to swim against the current to even stay afloat, which will greatly harm its ability to make money and protect its employees.
A bad reputation is hard to shake off – once it is there it might haunt the firm for years to come, so the best solution is to be proactive and take steps to ensure that your firm never gets into trouble. To do this you must focus on ensuring that every employee of the firm, including the partners, are complying with every regulation they’re bound by. If you can ensure that your firm is doing this, then the chances of the firm’s reputation being sullied will go down drastically and a culture of compliance will have been successfully built.
However, building a culture of compliance can be hard to do – there can be many problems that crop up that may seem small at the time, but if left unchecked can snowball into disasters. It is every employee’s responsibility to ensure that they are complying with the rules of the firm, but it is also the senior management’s responsibility to make sure that all employees are fully trained in these rules and that there are no obstructions to following them. For example, if employees are required to report money laundering suspicions immediately then there must be a competent system in place to accommodate their notifications. Compliance is not just the employee’s responsibility, but the firm’s as well. Compliance must be seen as a priority by the management team in order to be seen as a priority by everyone else. This means that a culture of compliance must start at the top, not just placed upon the employees with expectations that aren’t matched by the management team.
One of the best ways to ensure compliance is to have a way to measure it. If you can see exactly where the firm is falling down in terms of its compliance, then you can see where you need to focus your attention in order to improve it. This also promotes a culture of accountability, where employees are open and honest about their mistakes because they know that it would be better for both themselves and the firm if they are forthcoming as soon as the mistake occurs, rather than waiting for it to be inevitably uncovered. Having an automated software system that manages risk and compliance for you will drastically help your firm to achieve a high CROI. By breaking down compliance into smaller sections and tasks software systems will do the majority of the work for you, leaving you free to focus on the more important aspects of running your firm. Having a system like this is an enabler – it de-clutters your work schedule and makes each work day streamlined and efficient.
Having an automated software system that manages risk and compliance not only makes your workday easier, it also ensures that there is less risk of an act of non-compliance occurring. This means that the firm will not have to worry about any potential fines as a result of non-compliance. It also means that the firm’s reputation will be built on its strict compliance with the rules and regulations it has bound itself to. You’ll see huge improvements in client care resulting in less client attrition and more business.
Compliance can be a difficult process at times and it can be subject to human error, but by monitoring compliance with a software system there will be much less chance of your firm’s hard work being undone with an honest human mistake.
Cultivating a culture of compliance within your firm can be a difficult and arduous process, but it can be made easier through having specific systems in place that monitor and record all instances of compliance and non-compliance. It is vitally important that firms ensure their compliance with the regulations, as not doing so can not only lead to monetary loss, but also a significant loss of reputation. By boosting your culture of compliance with an automated software system specifically designed to help, your firm will be able to deliver a high CROI and maintain its good reputation.