Compliance will need to justify its existence

The tide is turning on the recent unrelenting increases in funding for ‘compliance’ functions. It’s no longer enough for compliance teams to justify their existence by simply being a mitigator of regulatory risk, although of course that’s essential.

Compliance functions need to measure and report to the board a measure of that mitigation, and more importantly, how and by how much they are returning on the investment made.

So, think about that for a moment...

...Compliance functions need to improve significantly in demonstrating to their board how they support strategic initiatives by developing frameworks that measure the effectiveness of their mitigation programs. This enables a business to accept more inherent risk while maintaining a similar level of residual risk.

The pressure on businesses in an increasingly regulated sector will not allow for continued increases in funding for compliance functions, at least, not without a much clearer view of the return on investment.