The Finance Leadership Playbook Part 4: Building A Strong Compliance Foundation To Improve Risk Mitigation

Michael Diehl

Part 4 of the “The Finance Leadership Playbook” series

The role of compliance and risk management operates on a fine line between business partner and watchdog. Advisory, monitoring, assurance, control, and management of regulatory relationships – these elements of the job enable a level of scrutiny required by government, industry, and corporate requirements. But at the same time, a distinct competitive advantage often emerges as new risks are addressed early on and new opportunities are explored strategically.

Even though risk management and compliance rank high in priority for most CFOs, a recent Oxford Economics study “How Finance Leadership Pays Off: Effective Risk and Compliance Management Boosts Performance,” sponsored by SAP, revealed that many of them are failing to do one thing that could make a significant difference: collaboration. This single handicap, according to the report, brings a level of isolation to the finance function often found in businesses with zero or negative revenue and profit growth.

Why it’s time to rethink risk management and compliance

Since the passing of major regulatory reforms 15 years ago, very little has changed in the world of risk management and compliance. Financial and reputational penalties for noncompliance continue to be a significant threat. Complex, time-consuming, and costly audit processes slow any effort to seize revenue-generating opportunities. And more perplexing, organizations have yet to master the balance between remaining vigilant with the need for disruptive innovation and continuous growth.

As the speed of change and disruption continues to accelerate, the need for rapid response and innovation grows. Finance organizations, however, cannot afford to shortcut their way to complete compliance and successful risk mitigation. Embedding controls within business processes can ensure regulatory, policy, and other forms of compliance. Furthermore, CFOs can enhance the effectiveness of their risk management programs, strengthen cybersecurity and trust, and protect and expand the brand’s reputation with confidence.

Take Vodafone, for example. The global telecommunications company with over 450 million subscribers has adopted a growth-by-acquisition strategy to build up its presence in many markets worldwide. The more the company acquired, a high volume of systems, processes, and information became part of its business landscape.

Vodafone decided to deploy one global system to not only connect all employees and organizations on a single platform, but to also heighten visibility into all areas of the business. As a result, revenue leakage decreased, and an agile new approach to work ensured greater compliance. More important, the technology maximized compliance reviews from a 10% sample to 100% coverage of its employees’ travel and expense claims. Vodafone can now quickly identify duplicate claims and other activities not aligned with internal policies. 

Mastery of risk management and compliance is a business value creator

New regulations may come and old regulations may go. But the need to understand the trade-off between finance control and the impact on the business will never go away. Every skill, every role, and every responsibility of the finance organization, as well as the technology it uses, must adapt to an economic and political landscape that will never stop evolving. With agility and unified insight, CFOs and their team can face of regulatory change and risk while contributing to the strategic success of the business.

Further explore the benefits of each of these pillars and the technologies that support them. Check out our blog series “The Finance Leadership Playbook” in its entirety and read the Oxford Economics study “How Finance Leadership Pays Off: Effective Risk and Compliance Management Boosts Performance,” sponsored by SAP. And for another look at this topic, read Thack Brown’s blog, “How Finance Can Make Compliance A Competitive Weapon.”

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Michael Diehl

About Michael Diehl

Michael Diehl is a senior director of Global Finance Audience Marketing at SAP, where he lead messaging and customer insights. With 16+ years of experience at SAP, he has a strong track record in technology innovations. His specialties include finance, machine learning, thought leadership, go-to-market strategy, digital marketing, messaging, and positioning.