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The journey to compliance transformation:

Why now is the time to rethink risk and resilience

"In essence, compliance should no longer be seen simply as a backroom cost centre but as a way of strengthening the brand, increasing productivity and driving growth."

Shawn Reain

While transformation has been on the agenda for business leaders for some time, compliance remains one of the last areas to transform at many Canadian organizations. But amid increased regulatory complexity, rising expectations from stakeholders, heightened concern about breaches and incidents and the emergence of new compliance technology solutions, this is a significant opportunity to not only simplify your risk management activities but also build trust and position your organization to grow with confidence.

Listen to PwC Canada’s Shawn Reain and Junaid Mirza as they discuss the first step in the transformation journey: rethinking compliance and risk management. 

"Think about compliance as a strategic imperative. . . . And instead of adding processes to make that happen, rethink the enterprise-wide compliance activities to make it more forward-thinking, digitized and future ready."

Junaid Mirza

Shawn Reain:

Hello everyone, I'm Shawn Reain, PWC Canada's Tax Markets and Compliance Transformed leader. So I'm excited to talk about the rising importance of compliance and how compliance function can be evolved to something that is not just a cost of doing business, but also a truly strategic value driver. I feel there's a massive opportunity in this time for organizations to rethink compliance. More and more organizations are seeing that the future isn't just about complying, but also building competitive advantage. To explore how transforming the compliance function can shift compliance from an obligation to an opportunity, I'm joined  by my colleague, Junaid Mirza, who leads our Legal Function Transformation team. Welcome Junaid.

Junaid Mirza:

Thank you, Shawn. Transformation, whether it's compliance or legal, is a topic that is very close to me, and I'm happy to share what I've learned from organizations that our team has worked with.

Shawn Reain:

Excellent Junaid. Thank you. And to start, I think it's important to clarify that compliance is more than just adherence to governance laws and regulation, and it actually spans across a wide range of risk areas from anti-money laundering and data protection to environment to tax compliance. So why don't we start with the basics, Junaid? What does compliance transformed actually mean for organizations?

Junaid Mirza:

So at the core, transforming compliance means elevating your compliance function into a position of strategic value. The point is really that stakeholders no longer expect organizations to meet the bare minimum compliance requirements. They expect them to go above and beyond, which can translate into a competitive advantage, but can also just be the license to operate in the first place. It can also reduce the cost of compliance within the organization. In fact, it can contribute to taking significant cost out of the compliance function, sometimes up to 15% to 25% and create a more agile and effective operating model

Junaid Mirza:

Imagine how impactful it could be to the business and employees if there was a reduction in time and resource required when the organization is most resource constrained. But more importantly, it helps deliver an outcome where decision making is strategic and sustainable, fueled by technology and aligned to a company's mission and objectives.

Shawn Reain:

Junaid, if we think about some of the conversations we've had at organizations, where do we see the most opportunity to enhance the approach to compliance?

Junaid Mirza:

Shawn, what's interesting is that we know regulatory complexity continues to increase the cost of compliance while stakeholders expect organizations to go above and beyond the minimum standards. I'm thinking ESG as an example, but organizations are still experiencing compliance failures, including major incidents that can have a significant impact on their reputation, or they're struggling with siloed complex processes that negatively impact customer experience and company culture, which is in many cases preventable.

Junaid Mirza:

There can be a tendency among some executives to act or react defensively and focus on reading the minimum legal requirements. What we're proposing is to take a step back and look at the bigger picture. Think about compliance as a strategic imperative. Be a leader. And instead of adding processes to make that happen, rethink the enterprise-wide compliance activities to make it more forward-thinking, digitized, and future ready.

Shawn Reain:

I absolutely agree with you, Junaid. One of the other reasons why transformation is particularly relevant to compliance right now is that even though transformation is a hot topic and a key focus area for executives, compliance is usually the last function to transform. But this could be a major miss especially given some of the other trends globally that impact compliance for example. We continue to see the emergence of more and more tech-enabled third party risk management capabilities that will help organizations reduce risk. Also organizations will increasingly be expected to adopt new tools.

Shawn Reain:

In the US, for example, in June of 2020, the Department of Justice updated its guidance on how to evaluate corporate compliance programs. It now requires organizations to show that they're leveraging data and applying modern analytics to draw insights and navigate the risk across their entire business network. We can expect to see these types of developments in Canada as well. As these trends take hold, we're seeing a significant increase in transformation by some of the organizations we work with. It's important to note that compliance transformation is a cross-functional issue involving different areas of the organization. Junaid, you work with legal departments on these issues. What does transformation look like for them?

Junaid Mirza:

That's exactly right, Shawn. Compliance is relevant to the legal function in a few different ways. As a risk manager for the enterprise, most legal functions at least have some oversight over or at least a dotted line link to the regulatory compliance and tax compliance activities. But legal is also responsible for ensuring that the organization is able to comply with its contractual obligations. The legal functions actual compliance activities can vary from enhancing or implementing entire compliance programs. So stepping in to elevate the overall compliance and risk governance function through the use of data and technology that can help predict where compliance or legal concerns may arise before they actually arise, whether regulatory or contractual.

Junaid Mirza:

As they focus on this, legal departments are facing rising demands to do more with less, which is creating challenges for legal professionals. We're seeing a lot of traction in the legal space as legal departments begin reviewing what transformation actually means for them, including how it can help them drive functional value and then articulate their impact on the business. So transformation of compliance related activities within the legal function is highly relevant and a pressing need

Shawn Reain:

And Junaid, how are legal departments approaching this transformation?

Junaid Mirza:

It's in a couple of different ways, Shawn. Legal departments are rethinking how their functions are organized, how they help manage risk and compliance for their organization and how they align their activities with the broader organizational priorities. And Legal departments are increasingly looking at use of technology to realize efficiencies and optimize processes while gathering data that facilitates data-driven decision making and risk management. As a specific example of the impact of transformation on the legal function, our team has been working with clients on implementation of contract lifecycle management systems and risk created contracting playbooks to reduce the time required by senior lawyers on drafting and reviewing contracts by as much as 30%.

Shawn Reain:

That's really exciting, Junaid. I'm sure many listeners will be interested to hear more about that in your upcoming blog. I want to say thank you for joining me today.

Junaid Mirza:

Thanks for having me, Shawn.

Shawn Reain:

The impacts of compliance range across all industries in various forms, from food safety to securities regulation to tax compliance. Looking at compliance transformation more broadly, I think there are several areas for risk owners to focus on. Number one, transitioning to compliance processes that are enabled by technology and data, number two, building compliance processes that use human-centered design principles, and number three, becoming more predictive, preventive, and proactive in your compliance activities. In essence, compliance should no longer be seen simply as a backroom cost center, but as a way of strengthening the brand, increasing productivity, and driving growth. 

Shawn Reain:

I hope you all enjoyed our conversation today. To discuss what transformation could look like for your organization, please reach out to myself or Junaid. Thanks for listening.

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About the speakers

Shawn Reain
Junaid Mirza

Shawn Reain is the Compliance Transformed Leader and the National Tax Markets Lead at PwC Canada. He has more than 30 years of experience helping organizations address evolving market trends and solve their important problems.

Junaid Mirza is a partner at PwC Canada specializing in transformation for legal and tax functions. He helps organizations deliver sustainable outcomes and meet business objectives by rethinking operating model design and exploring process optimization and outsourcing as well as smart automation technologies.

Contact us

Shawn Reain

Shawn Reain

National Tax Markets Lead, Compliance.Transformed leader, Partner, PwC Canada

Tel: +1 403 509 6373

Junaid Mirza

Junaid Mirza

Partner, Legal Function Transformation and Tax Reporting & Strategy, PwC Canada

Tel: +1 905 815 6404

France-Anne Fortin

France-Anne Fortin

Partner, Risk Assurance Services, PwC Canada

Tel: +1 514 205 5438

Genevieve Groulx

Genevieve Groulx

Partner, PwC Canada

Tel: +1 403 441 6350

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