Other parts of this series:
The financial services compliance operating model has continued to evolve in recent years, focused on keeping the business in compliance. But the function has grown in focus and stature—and now its scope may be shifting.
Our 2019 Compliance Risk Study surveyed some 150 financial services compliance executives. More than half (60 percent) of respondents agree the function is evolving. Specifically, they say in areas such as Know Your Client (KYC), testing and surveillance, responsibilities previously owned by compliance—in the second line of defense—are moving to the first line of defense.
Why? Respondents say we’ve reached a tipping point in the function. Recognizing the increasing importance of KYC, testing and surveillance work, the front office is stepping up to defend the business.
This is perhaps an inevitable outcome of the information age and the increased risk and exposure new technologies and processes bring. It’s also a positive trend for the front office—and for the compliance function. As key responsibilities shift, the compliance function is free to dig deeper and find opportunities to better integrate business process and controls across second line functions, such as operational risk.
Building better connections is essential for compliance. Survey respondents report up to 13 percent of a compliance officer’s time is spent liaising with other control functions. A more integrated, connected approach can make compliance professionals more efficient. They can spend more time on advisory and analytical skills, identifying better ways to help the first line of defense protect the enterprise.
But there’s more. Re-confirming roles and responsibilities within and across the enterprise’s lines of defense provides a cohesive, coherent approach.
As the front office steps forward, compliance leaders can take ownership of how their function performs throughout the enterprise, thus increasing its stature and keeping the “seat at the table” that it earned post-crisis.