The Emergence of Chief Compliance Officers (CCO)

The role of Chief Compliance Officers (CCO) continues to trend toward an increase in significance and value within corporate governance.  In the past decade the role of the CCO has become more independent of the office of the General Counsel.

This trend has been the result of a number of factors, including public scandals in a multitude of industries.  The abundance of scandals, damaging public opinion and the outcry for greater oversight and accountability has triggered more stringent regulation and law.  In addition, Federal Sentencing Guidelines were amended to include criteria for criminal liability.

These trends have fostered corporate policies and procedures to not limit standards, regulations and laws, but expand to include commitment to an ethics program.  As such, terms including “Core Values”, “Code of Conduct” and “Ethical Responsibility” have become entrenched in mission statements and training programs across an array of industries.

Example: Checkout how a GRC software for Energy and Utilities industry works

Chief Compliance Officers now have greater power within the corporate infrastructure to impact positive change.  Recent studies have found the staffs and budgets allocated to the CCO and subsequent compliance efforts have grown steadily.  The value of the CCO is also being recognized.  CCO compensation has steadily risen since 2010.  While compensation is not always the leading indicator of corporate value, the salary of the CCO is becoming more comparable to other C-Level functional leaders.

The interesting component of the emerging influence of the CCO, is the delicate balance the office must have with the Board of Directors and other C-Level executives.  The CCO must have independence, authority and resources.  However, there needs to be a clear understanding regarding reporting potentially negative results in a transparent manner without the threat of retaliation.  It may seem obvious.   When it comes to ethical behavior, the organization must practice what is preached.  Clearly, the stakes are high.   As the laws have become more strict and the risk for non-compliance becomes more expensive, the CCO office has become more important to global organizations.

On a similar note, CCO can streamline their compliance tasks and deliverable through automated regulatory compliance software that could easily take care of their compliance problems.

 

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