The compliance investment | KPMG | AU

The compliance investment

The compliance investment

Realising the value of compliance through greater effectiveness, efficiency and sustainability.

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Organisations today are challenged to address diverse regulatory and business changes that put new demands on compliance. The pace of regulatory change, convergence in global regulation, and competition from new market entrants that is driving increased consumer and technology demands have created a complex environment for compliance leaders across all industries.

Many organisations now view compliance as an investment and not simply as a cost. These organisation realise that business and operational value can be derived by integrating compliance across the business and positioning it to contribute to business decisions and adapt to the changing business and regulatory environment. They are moving toward a transformation that allows the organisation to derive greater value from compliance through increased effectiveness, efficiency, and sustainability.

Compliance framework

KPMG has developed a proprietary compliance risk management framework that consists of fundamental program components with governance and culture at the core. While many organisations understand the need to continually advance in their compliance journey, there are several actions compliance leaders can take immediately to move toward greater agility and proactive compliance management.

  • Review the ‘strategic’ vision for compliance – Compliance leaders should determine if the current compliance approach meets the organisation’s needs. For compliance to be effective and sustainable, it must be aligned and integrated with the business.
  • Use an enterprise-wide risk assessment – Compliance leaders and the board of directors need enterprise-wide risk assessments in order to have a holistic understanding of the organisation’s risk universe, the materiality of those risks, and its systemic risks.
  • Ensure an effective three lines of defence – Organisations should evaluate if their three lines of defence are used effectively. Compliance leaders should confirm that roles and responsibilities for each line of defence are clearly defined and appropriately aligned with each line’s mandate.
  • Assess the organisation’s ‘culture of compliance’ – Regulators view an organisation’s compliance culture as an essential control against misconduct. A ‘cultural assessment’ enables compliance leaders to understand whether people are comfortable with the organisation’s culture, how employees view organisational justice, how management decides ethical issues, and if employees are willing to identify issues without fear of retaliation.
  • Assess current technology – Technology and data analytics are essential tools for preventing, detecting, and even responding to potential compliance misconduct. Organisations face a significant transition to digital content and records, changes to their core platform systems, and the need to further aggregate their compliance risk indicators.
  • Proactively address regulatory change – Responding ad hoc to regulatory change typically limits an organisation’s time to assess needed changes and determine the right solution. Instead, organisations must be able to adapt proactively to the changing regulatory environment.

In taking these actions, compliance leaders will be positioned to strategically refine their compliance approach. This can move organisations toward a compliance transformation that helps them realise increased effectiveness and improved efficiency and sustainability.

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