Kristin Bajor (ZF Group): “Compliance programs increase customer and investor confidence”

Leaders League : What does the expression “compliance as value creation” mean to you, in concrete terms?

Compliance as value creation is a catalyst for building stronger business relationships and trust. Through a robust compliance culture and engagement in compliance initiatives throughout the company, businesses are rewarded with new efficiencies and growth opportunities. This is an important shift from the traditional viewpoint of compliance simply fulfilling a policing or control function.

How can compliance professionals help expand the mindset of compliance from a policing or control function to a partnership-based approach?

Compliance professionals need to be approachable and work together with business stakeholders to integrate compliance objectives into business plans. For example, business stakeholders need to be brought into the planning of compliance risk assessments upfront to offer critical business feedback and the outcomes of such assessments need to be shared for understanding of resulting mitigation measures.

Compliance training and communications need to be tailored to the needs of the target audience and provide practical use cases relevant to recipients’ areas of responsibility. Policies and procedures need to be designed in ways that are understandable to employees and can be integrated into day-to-day operations. In short: compliance professionals should operate collaboratively and must secure stakeholder engagement if an effective compliance management system is to be achieved.

What role does a strong compliance culture play in value creation?

Companies cannot be compliant without the buy-in of their employees. This includes a clear tone from the top as well as compliance being integrated into the everyday responsibilities of all employees. Leadership, together with compliance professionals, must consistently reinforce compliance expectations across the company. Ethical behavior needs to be promoted and demonstrated by senior and middle management so that employees understand its impact within the company and to outside stakeholders.

With a strong compliance culture, ethics and accountability are embedded into decision-making and employees feel empowered to speak up when there is potential misconduct. As a result, the company reduces its reputational, financial and legal risks, and increases its business opportunity through organizational trust.

Organizations perform significantly more efficiently and effectively when a transparent corporate governance framework is established.

How does compliance benefit strategic and operational objectives?

Strategically, robust compliance standards allow for opportunities in regulated markets and with business partners. Strong compliance programs increase customer and investor confidence and regulators expect strict adherence to compliance and legal requirements. Compliance helps prevent legal issues, regulatory fines and a negative reputational impact, all of which also affect an organization’s profitability.

Operationally, organizations perform significantly more efficiently and effectively when a transparent corporate governance framework is established. Clear compliance policies and processes establish consistency across departments and regions and support employees in informed decision-making. The identification and mitigation of risks preventatively help ensure timely remediation of issues. An effective whistleblowing mechanism allows for early detection of potential wrongdoing before escalating to a major concern. Compliance initiatives support business continuity and help organizations respond more effectively to audits, investigations, regulatory changes and emerging risks.

What is the most underrated source of value that compliance professionals create, which C-Suite executives do not yet appreciate?

The prevention of compliance risks through a well-defined risk management process is often largely invisible, particularly to C-Suite leaders. This is because the intention of this process is to reduce or eliminate the occurrence of issues that may otherwise result in fines, investigations, reputational damage or operational disruption.

Understandably, executive leaders’ awareness is primarily drawn to concerns that require their immediate attention. Priority is given to critical performance metrics and actualized matters, not potential risks that are often difficult to objectively quantify. Nonetheless, it is important for C-suite leaders to recognize the significant business-value created by the reduction or avoidance of issues through compliance risk management processes.

Compliance risk management creates value by identifying and mitigating risks before undesirable outcomes materialize ‒ and if properly handled, such risks may then never have a negative impact for the company. When executive leaders champion compliance risk management as an essential way to create value for the organization, this sets the tone from the top shaping the expectations for employees and results in compliance becoming an integral part of the overall business strategy.