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Freeman Cebu Business

What is a Compliance Officer? Do you need one?

INTEGRITY BEAT - Henry Schumacker - The Freeman

For corporations, corporate compliance is a staple item on the board’s agenda—and those boards need someone who helps them manage compliance. That person is the compliance officer. While this all sounds nice in theory: what is a compliance officer, and what does that person do?

For a traditional definition, we could say that a compliance officer is the person responsible for assuring that the company can fulfill all its duties under whatever laws and regulations apply to the business. They are in charge of identifying and mitigating risk. That is, he or she assures compliance. Hence the phrase.

We should remember two specific points about that definition.

First, the compliance officer is responsible for assuring that the company can fulfill its duties—not for doing those duties directly. Typically, someone else in the company must actually perform whatever those duties are. The compliance officer’s job is to assure that the policies, tools, and training to do all that work actually exist.

For example, Philippine citizens have the right to view, correct, or delete any personally identifiable information your business collects about them. The compliance officer doesn’t have to handle those requests personally but needs to assure that the company has some mechanism to handle those requests.

For example, Philippine law outlaws the bribing of government officials to win a business contract. Compliance officers work to assure that the company has drafted anti-bribery policies and trained employees on what those policies are. That’s part of the compliance officer’s job.

On the other hand, if a company made no effort to bother with compliance—never adopted any policies, never trained employees, never examined potentially sketchy business partners—regulators will be much more likely to decide that the company is the problem because it didn’t take compliance seriously.

That’s what a compliance officer is: the person who helps the company to take its compliance duties seriously.

Compliance officers also fill many other roles that are a bit more metaphysical in their nature. Let’s consider those, too:

1. Compliance officers encounter suspicious issues all the time. Some are anonymous reports, others are the results of audits, and yet more might be the product of your own gut instinct that something is amiss. Compliance officers need to investigate those questions (or parcel them out to others who can) and find answers.

2. The hard part isn’t understanding what a compliance officer does; it’s understanding how to administer all those duties at scale—with thousands of employees, tens of thousands of third parties, and potentially millions of transactions. Compliance officers need to use technology shrewdly to automate and then analyze, as much of that work as possible.

3. Compliance officers sometimes need to make difficult decisions about what the best course of action is in complex, ambiguous circumstances. They might also need to define ethical principles for the company, so others know how to make similarly difficult decisions. That requires an ability to sit back and think about ethics, and how those values fit into your company’s everyday transactions.

4. Compliance officers train others. Sometimes they train employees; sometimes they train managers who train employees. Sometimes they brief the board on ethical conduct and duties required under the law. Whatever the setting, compliance officers need to be comfortable teaching others.

Does your company need a compliance officer?

In all likelihood, your executives and employees  want to work for an ethical company. They will try their best to obey the law, follow regulations, and act in an ethical manner.

But does anyone really believe that the company will succeed at the goal? The plain truth is that most companies need someone assigned to compliance because corporate compliance has become such a complex and wide-ranging endeavor.

Leaving each business department to manage its own compliance affairs is a bit like letting a group of medical specialists care for a patient without a primary care doctor to monitor the patient’s overall health. Sure, everyone means well, and you might get great treatment for specific ailments—but you won’t get any holistic sense of how healthy you are, and lord knows how much more money you end up paying for unnecessary treatments and co-pays.

Compliance without a compliance officer is a lot like that: undisciplined, effective in some ways but ineffective in others, and expensive.

The good news is that anyone can be a compliance officer; no special license is necessary, as is the case for lawyers or public accountants. A compliance officer only needs the skills outlined above (admittedly not easy), and a desire to help the company succeed in today’s complex business environment.

Companies need compliance officers because that complex business environment is here to stay, and will further expand. If you need assistance, contact me at schumacher@eitsc.com

COMPLIANCE OFFICER
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