How Compliance Can Increase Your Profits

It was without a doubt that the cost of being compliant in what appears to be a never-ending cycle of regulatory reengineering. Over 200 billion dollars in compliance costs are expected to be paid by financial services companies around the world by end of 2021, according to LexisNexis research. The aforementioned statistic may surprise some, infuriate others and, conversely refresh many boards of directors depending on their perspectives and experiences with compliance professionals. However, what is not up for debate or based on perspective is when properly implemented, compliance and the professionals that help mitigate its risk can greatly contribute to the oversight of strategic governance within the organization.

It is against this backdrop, I ask you boards of directors, c-suite leaders and my fellow compliance professionals to consider whether your compliance function is helping or hindering progress.

I submit that compliance can provide exponential results while ensuring regulatory compliance. In this article, I'll talk about three major ways that compliance can help your institution.

Compliance is a profit booster

Failure to meet regulatory requirements can be costly. By penalizing the bottom line through fines, regulators are conveying that it is not worth the risk to be non-compliant. Just ask H&M the fashion magnate. They were fined north of 35 million euros for breaking data privacy laws in Europe. Plainly, that is 35 million euro less in profits either directly or indirectly. These penalties which flow from General Data Protection Regulation (“GDPR”) have no bias to industry.

The above penalties and others are absolutely avoidable, and your compliance function can help. Highly trained compliance professionals coupled with technology solutions who are managing a robust regulatory compliance regime help alert appropriate stakeholders of risk and how they can be avoided.

Compliance makes your organization attractive

A compliance program with a greater degree of visibility into all its core functions will operate more efficiently, consistently, and with greater simplicity. The value earned and learnt can be used to assist executive management with strategic decisions. These decisions can yield positive results such as enhanced competitive advantage and a better understanding of how macroeconomic factors are impacting previous business strategies. This ultimately makes an organization at a minimum more attractive to potential investors and stakeholders.

Compliance provides the playground

Yes, the above sub-heading sounds playful at first glance for a business article. But I proctor that it aptly describes the environment. Instead of having the “I got you” temperament or the “Your actions are in breach of law” with a condescending spirit, the new, agile and enabling compliance professional can calmly, rationally and strategically provide guidance before decisions are made that equates to the “playground”. The playground here represents the parameters and options available to an organization to be creative yet compliant.

Conclusion

The time has come for organizations to be proactive about compliance if they wish to innovate and grow. By intricately involving your compliance function, organizations can hugely benefit through managing reputation risks and broadening their competitive advantage and attractiveness. Additionally, even the most complex regulatory environments can be navigated with the right support and careful planning, as well as collaboration with adequate partners. Profits can be realized and enjoyed by running a regulatory compliant ship.