"When I get my MBA, I want to build a career as a Chief Compliance Officer."
Just imagine if that were one of the top ambitions of the top students at the world’s top MBA programmes and business schools. Not the CEO, not the VP of marketing, not the Finance Director or the IT Leader, but the CCO.
The one who enables sustainable growth. The one who champions organisational ethics for the betterment not only of the company but also of society. The one who steers the business clear of future problems. The one who helps business managers take the right risks.
As PwC’s State of Compliance 2014 survey suggests, that could be the bright future of the Chief Compliance Officer a decade from now. And in some highly regulated sectors, such as pharmaceuticals and life sciences, that future is already materialising.
In the year 2025, business ethics will be front and centre, fuelled by public intolerance of past corporate scandals. Investors, customers, NGOs and employees alike, enabled by technological advances such as big data analytics and social media, will be able to monitor and judge corporate conscience — and will have greater power to effect the rise or fall of corporate reputation.
Business growth will require taking greater, but smarter, risks as the pace of change accelerates, and knowing what lies ahead gets trickier. But growth at all costs will not be accepted. It will require accountability and responsibility, respect and consideration of all stakeholders. This will be a time when businesses are under pressure to use scarce natural resources sparingly, and are heavily penalised by governments for acts of environmental or social damage.
It will be a more complex time, a riskier time — but consequently a promising time for those who manage the risks to their advantage.
In this future, the Chief Compliance Officer will sit right at the very centre of the seismic shifts reshaping business. Across all sectors, this role, which barely existed 15 years ago, will be a much closer confidant to the CEO, a permanent member of the leadership team and a sought-out risk advisor when strategies are being set. Their voice will hold sway, and their wisdom will contribute to the resilience of the organisation.
Here then, is a jump forward to look at the Chief Compliance Officer role of 2025. How are CCOs spending their time? What issues are they tackling?
Why is it just as likely that they could be an MBA graduate as a law graduate? And can a CEO be effective without a CCO?
Come 2025, many components of today’s compliance function will be largely embedded into the organisation, as elements of finance are today. But far from making the function redundant, this will actually free it up to focus on enabling success through better risk management — as opposed to better framework management.
Indeed, PwC’s State of Compliance 2014 survey suggests that some organisations are already heading down this path, although the level of progress varies according to industry and size.
And here’s why CEOs — as well CIOs, CMOs and CFOs — will need their CCOs close by their sides in 2025. The business environment is not going to get less risky or less complex. Global megatrends — such as technological breakthroughs, accelerating urbanisation, resource scarcity and climate change, shifts in global economic power, and demographic shifts — will continue to bring massive surprise and disruption.
Not planning for these surprises when setting strategy will only make running the business more challenging later.
The Chief Compliance Officer of 2025 will be closer to the front end of strategy setting, keeping their eyes on how the strategies on the table might impact resilience. They will be more focussed on the strategic risks — those that threaten the sustained growth of the business. They’ll be equipped with technology and metrics to see the potential problems ahead and be there to help mitigate them, early.
With an eye on the substantial risk and opportunities which these global megatrends will create, here’s a preview of the increasingly valuable role the CCO of 2025 will play across a number of industry sectors:
While most CEOs today would not recognise the Chief Compliance Officer described above, they would surely appreciate having a C-Suite partner who could see the big picture and could help the business shift course as outside circumstances change — such as new leadership in an emerging market, changing legislation, or changing public perception of the company.
So what roles does this person play?
These are large responsibilities. Do today’s compliance officers have the right blend of strategic thinking and risk management skills to fill these shoes? Some do, but many do not.
And what if the CCO is a very important role that nobody wants? Then again, going back some years, who would have thought the Chief Bookkeeper would become the CFO of today? It’s not that much of a stretch.
So where is this function headed? Is Chief Compliance Officer even the right name for it? Aren’t we actually describing a Chief Resilience Officer, or a Chief Enabling Officer? After all, that will be the value of this person’s work come 2025 — greater resilience and enablement. In a fast-changing world, can a CEO be truly effective without one?