Redefining compliance – From obligatory checkpoints to strategic assets

The uncertain global economy is challenging businesses, forcing them reassess priorities to ensure fiscal stability. These tough conditions, and the need to rethink strategy often at lightning speed, can shine a spotlight on poor processes, as organisations grapple with half-baked insights founded on inadequate information. The same can be said for compliance, with countless organisations failing to appreciate the potential strategic benefit of optimised compliance and internal controls processes. Instead of merely being a cost cutter or a mandatory checklist, well-run, efficient compliance programs can act as a driving force for transformation, propelling business value. A recent study by FloQast, "Compliance and Controls: The State of the Industry," sheds light on the disconnect between investments in compliance and the tangible value realised by organisations Reinvesting in Today's Compliance Processes At a cursory glance, the numbers paint a concerning picture of the compliance landscape. A staggering sum of $2.4 million is the average annual spending by organisations on compliance and internal control processes. But here's the kicker: only a meagre 26% of those surveyed felt their compliance efforts translated into significant organisational value. It's a massive disparity and points to a profound misalignment in how compliance is perceived and executed. An overwhelming 93% of compliance and controls management professionals are motivated primarily by the need to adhere to regulations. The underlying aspiration to extract strategic and organisational value from these processes seems to be largely amiss. When compliance is viewed merely as a regulatory obligation, it's no wonder it's perceived as a burden rather than an asset. It's crucial for companies to move beyond traditional "checkpoint" compliance tactics. This shift isn't just advantageous, but a necessity, as outdated practices pose significant operational and reputational risks. Reimagining compliance means understanding its strategic value, with effective measures not only reducing risks but also driving broader organisational success. Although some organisations hesitate to revamp their compliance strategies due to perceived costs, the advantages of a streamlined approach—including enhanced operational efficiency, strategic coherence, and better resource allocation—surpass the expenses. Harnessing Technology for Value-Generating Assets The importance of technology in streamlining business processes cannot be overstated. This holds especially true for compliance and internal control processes, which can be intricate and multi-faceted. Yet only 30% - a fraction of organisations have fully embraced automation, even though those that already have a strong technical foundation report enhanced advantages from integrating new technologies. Integrating technology into compliance processes isn't just about ease and efficiency; it's about reinvention. The right tools can streamline workflows, significantly reducing manual efforts that are not only time-consuming but prone to human error. Enhanced data accuracy ensures decisions are made on a solid foundation of facts, while real-time data access provides an agility that can be a game-changer in today's fast-paced business world. Furthermore, technology aids cross-team collaboration, it breaks silos and encourages a cohesive approach to compliance. Centralised platforms can offer a bird's eye view of operations, identifying potential risks and addressing them proactively. This proactive approach not only mitigates potential penalties but safeguards an organisation's reputation in the public eye. However, leveraging technology's full potential requires more than just onboarding tools; it demands a mindset shift. Organisations must be willing to invest, not just financially, but in training and continuous learning. The Strategic Approach: More than Just Compliance Only 37% of organisations today have strategic initiatives centred around compliance, and a mere 35% understand how their compliance efforts impact the broader business. This points to a pressing need to elevate the perception of compliance from a “check the box” affair, to an integral part of organisational strategy. When compliance is woven into the very fabric of business strategy, it can drive transformative change. It ensures that every decision is made with an understanding of its regulatory and ethical implications. It empowers teams, giving them clarity and purpose, enabling them to see beyond their immediate tasks to the larger organisational picture. But achieving this necessitates a dual approach. On one hand, leadership needs to articulate a clear vision, aligning compliance goals with broader business objectives. On the other, there's a need to foster a culture where every employee, irrespective of their role, understands and champions compliance. In this environment, compliance is seen not as a burden but as a value driver, enhancing organisational agility, decision-making capabilities, and overall operational efficiency. The Road Ahead to Enhanced Compliance Businesses cannot afford to overlook the strategic potential of compliance, rather than viewing it as a speed bump or obligatory checkpoint, the call of the hour is to reimagine and reshape how to approach it. Harnessing compliance as a key contributor to strategic advantage requires a multi-faceted approach. It demands an integration of technology, a renewed focus on strategy, and a cultural shift. But the rewards, both in terms of tangible value and intangible reputation, are worth the investment. The onus now lies on organisations to take the wheel and embark on this journey, championing compliance not just as a regulatory necessity, but as a cornerstone of their strategic vision.