A robust compliance program is one of the most critical aspects for an organization to succeed in a modern business environment. Experts believe that compliance and governance programs built on the foundations of values, beliefs, and ethics are critical. An undermined compliance culture causes harm and can inhibit the growth of the organization and affect the ability to sustain success. On the other hand, achieving and promoting this seamless integration of trust and integrity into their compliance efforts displays far greater value. 

VComply spoke to compliance expert Patrick Henz to know his views on modern compliance practices. Patrick is an experienced compliance leader and Head of Governance, Risk & Compliance at an engineering and plant construction company. Prior to this, he was a Compliance Officer at Siemens Industry Inc., responsible for Customer Services and Metals Technologies. 

In this interview with VComply, Patrick offers practical and actionable insights on various aspects of compliance management. All opinions expressed within the content are solely his own and may not reflect the opinion and beliefs of the company he is working for. 

You can read the interview here: 

VComply: What are the different compliance challenges small and medium organizations face?

Patrick: There are two scenarios: smaller companies that are part of big organizations. The next category is small independent organizations. First, let me take the scenario of small companies being part of big organizations. At smaller organizations, it is imperative to implement compliance and continue the compliance momentum. Significantly, everyone understands the importance of compliance and is ready to be “on board” for implementing compliance processes. Small companies that are part of more prominent organizations might have to practice different local regulations as well as the ones that need to be followed at the international level. These organizations might have different approval levels. Establishing compliance conversations with headquarters is essential so that expectations are clear. Motivate your employees, improve productivity and bolster employee retention. Just like James Bond in the movies, as he visits his departments to what are the latest gadgets available to solve his problems, even the compliance officers can evaluate technology to solve problems. 

The smaller organizations might have compliance budget constraints. These organizations can evaluate budget-friendly compliance tools and risk-alerting mechanisms. In small organizations, people wear different hats. The person in charge of compliance responsibilities might work on hr related tasks, export council, and internal audits. They may not be dedicated to one area; they must ensure adequate compliance. Is it easy to manage compliance in low-risk geographies like Canada, US etc. However, we live in complicated and global connected times in a complicated world; it’s better to appreciate compliance efforts. 

VComply: Considering compliance, risk, and governance are connected, how do technology solutions impact them? 

Patrick: The first important step is risk assessment. Risks are different and come from various sources. And as risks are changing, the risk assessment should be a continuous process. Analyze all potential risks – local, technological, physical, natural hazards, market, regulatory risks, etc. Additionally, collect potential risk data from various sources and databases and assess the impact so that you can implement sophisticated risk solutions and be better prepared. Select sophisticated risk solutions to manage and mitigate risks depending on the overall risk management approach. 

Regarding governance, the organizations should comply with regulations, have published policies and efficient processes, an intranet portal for regulations and policies, train employees on policies, establish ethical standards, and entrust accountability and ownership to stakeholders. Furthermore, policies should be nonbureaucratic, and stakeholders should carry on their responsibilities without micromanaging. If you are a compliance officer, make employees aware of their accountabilities and responsibilities, and if there are deviations, then escalate the issues to higher management. 

Coming to compliance, training your stakeholders on regulations encourages them to demonstrate empathy. Talk to employees and make them understand not to indulge in corruption by explaining the impact of corruption on human minds. Businesses should build a sustainable compliance approach well integrated with ESG and Safety management. The technology you select should have an interconnected suite of products that can bring together tailored compliance, ESG, risk, audit and governance efforts. 

VComply: What is the best time to shift to a GRC tool from traditional tools like spreadsheets, and who should initiate this transition and how?

Patrick: Establish a robust foundation for the compliance program, and decide the budget based on compliance goals. Analyze your risks, perform a risk assessment, and see what the potential risks are and what their impact could be. See what’s the organization’s risk appetite and what risks are acceptable and what are not. A compliance officer should understand the business the organization is dealing in, the associated inherent risks, the availability of technical expertise, and the tools available in the market. After evaluating the compliance requirements, goals, and resources available, the compliance officer should consider shifting to a suitable GRC tool.  

Implementing a GRC tool might require a transformation in your organization. It requires change management – new processes. Before implementing the new tool and processes, communicate the need for the change and its benefits to your employees. You might consider getting help from project management teams to implement the new processes.  

VComply: What are the compliance things/processes organizations automate? What are the ones they should not? 

Patrick: Coming to what I mentioned first, a compliance management program should start with efficient risk assessment. Compliance managers should understand the environment where they are operating, the compliance strategies and goals of the organization, and their experience with prior compliance programs. The compliance officers should decide what they want to automate based on risk and data. The most important factor is knowledge. After covid, the business industry has seen higher employee turnover for various reasons. It is vital to create organizational policies on antibribery, anti-corruption, and anti-money laundering and train employees on policies. You can use tools for imparting knowledge and making policies available online 24/7.  

You can integrate AI with compliance management and create custom alerts for high-risk areas. Let me tell you a funny anecdote, whenever an Amazon delivery person comes to my doorstep; my dog starts barking. The dog is just giving me an alarm and allowing me to decide whether to open the door or not. AI is similar to the dog; you can configure it to create custom alerts to warn you about any impending risks. Another aspect you can consider automating is continuous risk monitoring and internal communication.  

You can avoid automating some compliance aspects depending on your organization’s culture. What I want the organization not to automate is less about compliance regulations. I suggest more interpersonal collaboration and better human touch. Still, there are a lot of fascinating technological trends happening around the world. It would be worthwhile trying some of them. 

VComply: Considering technological advancement, how can organizations build a culture of compliance? 

Patrick: W. Edward Deming’s in his “System of Profound Knowledge,” speaks about a holistic approach connecting to the partners, customers, vendors, neighbors, and environment. Organizations constitute employees, so organizations should focus on employees and help them find their place in the overall system. And the organizations should continue pursuing the founder’s vision. Most of the time, founders start a company not only to make money, but change some aspects of the world. A company is a system interacting in its entirety, employees should take a positive approach to technology, not consider it an enemy pushing them out of their comfort zone, and that helps them keep ahead of the competition. In the modern world, AI is winning over many facets of life. Leverage AI technology to build a resilient culture, protect employees, and support them not falling for pitfalls such as cyber-attacks.

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