Not long ago someone asked me how compliance technology is changing the face of compliance. It’s a great question because in many ways technology has made corporate compliance programs immeasurably better, and more important.
At the same time, compliance solutions also challenges compliance professionals like never before. That says a lot about how technology is changing the face of compliance, too.
Benefits of Compliance Technology
Let’s start with the good stuff. More than anything else, compliance technology has let compliance officers weave their concerns and priorities into the whole enterprise.
Whether we’re talking about whistleblower reporting systems, or due diligence procedures, or employee training, or internal controls to support policies and procedures — compliance officers can push all those things to the furthest reaches of the enterprise, thanks to technology.
For example, 30 years ago, you might never know that someone in a remote part of your company was working with a corrupt reseller in a foreign market. Invoices and contracts existed in paper format, tucked away in a filing cabinet or storage warehouse you might never reach. Training would be delivered by manuals or in person, and if employees took any test at the end of the training, the test was (you guessed it) another piece of paper that got filed away.
In other words, compliance programs existed, but they were exercises that employees did, rather than standards of behavior you could monitor—and that’s what compliance solutions have done for compliance programs. It has created ways for compliance objectives to be part of daily business processes, where you can see how well employees are or aren’t achieving those objectives.
With the right technology today, the compliance officer can immediately know when someone in an overseas office wants to use a new local agent. Since much of the due diligence for that agent can be automated, you don’t even need to rely on that overseas employee to do it. Contracts and invoices can be centralized in one system.
That is, compliance technology has left less room for operating parts of the business to evade compliance issues; the compliance officer can monitor corporate behavior more thoroughly, and impose more accountability.
In many ways, that’s fantastic. Corporate compliance programs are supposed to reduce risks for the business, and compliance technology makes the program much more effective at doing that. It makes the compliance program more important to the business because an effective compliance program helps the company to be more responsive and agile in a complex, high-risk environment.
Now let’s return to the challenging compliance professionals like never before part…
Unlocking Technology’s True Potential
Compliance technology is also transforming the compliance profession because of the skills people need to take full advantage of it.
First, are the skills to design a compliance tech stack that meets your needs. An understanding of regulatory issues is crucial, so it’s great that many CCOs come from a legal background. Nowadays, however, compliance officers also need to navigate issues such as data governance, risk taxonomies, data taxonomies, access controls, software integration projects, and more.
Why? Because compliance technology has let compliance programs become much more about gathering and analyzing information, on a scale no one would have imagined 30 years ago. So compliance leaders need additional skills to understand and build those systems wisely.
Compliance officers themselves don’t need to be masters at data governance, internal control, risk taxonomies, and the like. They do, however, need to know where to find that expertise. Compliance technology has driven up the need for building alliances and forging consensus, so you can build sustainable, auditable business processes that pass regulatory muster.
Moreover, once your compliance technology is working, and does make the compliance program much more relevant to the company’s business operations—compliance officers need still more skills to put all that potential to good use.
For example, if new technology identifies weaknesses in your vendor onboarding process, you might need to convince operations teams to change their workflows; or propose the creation of a centralized procurement function.
Or if the company is reviewing plans to enter new markets, or change incentive compensation policies, you might now be able to participate in those conversations more fully, because the technology gives you more data to show how those decisions might affect ethics and compliance risks.
That’s all great, but it increases the need for highly strategic thinking, negotiation savvy, and ability to put compliance concerns into practical business contexts for your organization. In a roundabout way, compliance technology has led to more emphasis on people skills and business acumen.
Then again, that tends to happen when a business function becomes more important to the success of the enterprise.