Business Case & News

Compliance, Corporate culture and senior management

Compliance – Senior Managers Competence Regime (SMCR), why it affects us all?

SMCR outlines a set of responsibilities and conduct risks.  Ultimately this leads to the conclusion that the only way Senior Managers of Financial Service organisations can demonstrate their compliance is to measure the corporate culture they are responsible for managing.  This set of requirements is being rolled out throughout 2019.

At the same time private sector organisations have a new set of compliance requirements to meet.  The Wates corporate governance requirements provide a framework within which larger private sector companies manage their businesses.  A significant shift in corporate reporting with two principles standing out:

1. Purpose and Leadership – including the monitoring of corporate culture.

2. Opportunity and risk – including risk management frameworks with a view on long term sustainability, risks that affect stakeholder needs, external and internal risk.

The Impact

Both SMCR and new Corporate Reporting requirements have at their heart the need to monitor culture.  This means that organisations need to have effective methods in place to identify where compliance and conduct risks are emerging from the corporate culture and that these risks are being managed and reported before they become a reality.

Once the risk emerges and appears on KPIs, audit reports and surveys it is too late and management can only manage the consequences.

Is the Financial Sector and larger private sector organisations alone?

No, ISO standards and H&S requirements for example are all heading in the same direction – monitor corporate culture and understand the risk this poses, so change is not optional for any of us.

The conclusion

Consequently, the traditional audit and assessment methods that continue to be used are not effective enough on their own.  These must change.

HPO Clearview uses an enhanced audit and assessment method and via a cloud-based platform measures that culture.  Making visible what is often invisible so that risks can be managed. 

Behavioural indicators / outcomes are forward looking risk indicators.  Audit reports, results, surveys and KPIs are backward looking, no matter how much big data is collected they are not truly predictive. 

About the author: Ian Rosam from HPO Risk Solutions is the creator of unique intellectual property to measure risk and business culture to business and compliance management outcomes. A system thinker, author and facilitator supporting the implementation of ERM and Management systems. Ian has worked in many different industry sectors.