This document discusses how compliance initiatives are often viewed reactively rather than strategically. It suggests organizations move from merely "surviving" by fixing issues reactively to "thriving" by taking a more strategic, preventative approach. Specifically, it recommends focusing on activities that introduce flexibility and prepare the organization for changing regulations rather than just addressing current problems. This strategic approach allows identifying opportunities earlier to better position the business for the future. The document advocates for a cultural shift towards more proactive long-term thinking for compliance.

1. INSIGHTS
Are you thinking about your Compliance initiatives strategically ?
From surviving to thriving
Compliance related fines totalled more than $3.5bn in 2012. Financial sector compliance has
moved from the business pages to the front page. LIBOR, regulations, capital adequacy, anti-
money laundering and other industry terms are becoming discussed as regularly as last week’s
football results.
We’ve observed in many clients that when people speak about compliance it tends to be
reactive – a problem has been identified and it needs to be fixed. Businesses tend not to see
compliance in a strategic fashion as it has traditionally been a cost centre that has not
contributed to the bottom line. A seismic perception shift needs to occur – compliance needs to
be seen as a strategic opportunity.
Surviving, th riving and playing the long game
The FSA has published a short guide that assists organisations with selecting compliance
consultants1. The first aspect addressed is how one should go about establishing one’s needs.
The questions asked can be summarised as follows:
 Do you have an area of concern or weakness and require a compliance audit?
 What level of support do you require or are there specialist areas with which you
require help?
It is essential to consider We believe that there is more that should be considered. Not only is it essential to understand
whether a compliance why the organisation has any need for a compliance engagement, it is also essential to
consider whether there are broader strategic opportunities that can be created.
initiative presents a
broader strategic
Why am I in this position?
opportunity
 One of the reasons may well be because you have an area of concern or weakness, a
reactive need (Surviving) …
 … but it may be because new legislation is on the horizon, or you have a desire to
introduce rigour into your processes. These two aspects (and many others) move
organisations from the reactive to the strategic space, and the compliance initiative
becomes an opportunity rather than simply reducing risk (Thriving).
Where do I want to be after this compliance initiative?
 Reactive compliance initiatives aim to make sure that an organisation is compliant
with the relevant regulatory body. The main aim is to keep your trading license
(Surviving).
 Strategic compliance initiatives allow for the creation of competitive advantages that
enhance both market and customer reputations. It’s about creating new opportunities
to allow your business to take the initiative rather than to wait and defend (Thriving).
Well known leadership author Stephen Covey talks about different quadrant behaviours 2. An
analogy for quadrant behaviours is the difference between putting out fires (quadrant 1, Q1)
and mitigating the spread of fire by cutting firebreaks (quadrant 2, Q2). Q2 activities feel less
urgent but, more often than not, reduce the need for Q1 activities. The same analogy can be
applied to how budget and effort is allocated across compliance projects.
1 - http://www.fsa.gov.uk/smallfirms/resources/factsheets/pdfs/factsheet_consultant.pdf
2 - Covey introduces this idea in The Seven Habits of Highly Effective People & details them further in First Things First
Business Systems Group (UK), Registered in England No. 6150570, 230 City Road, London, EC1V2TT
www.bsgdelivers.com // @bsguk
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2. INSIGHTS
Are you thinking about your Compliance initiatives strategically?
Firefighting is merely Our observation is that currently a lot of compliance initiatives are Q1 activities – projects to
about surviving, there’s “fix up” process gaps, gather new pieces of data, etc. This short-term approach ticks the
current box, but doesn’t structurally improve the organisation’s ability to meet changing
no long-term structural compliance regulations. A “thriving mindset” demands that we spend more time on Q2
benefit activities to introduce flexibility into the overall business system, allowing the organisation to
be better prepared to meet changing compliance regulations.
Get ahead of the game – start taking those strategic
opportunities
Thriving demands It is an unfortunate reality that budget for compliance initiatives is typically allocated to Q1
thinking about the type projects, taking a surviving mindset. If this budget were to be, at least in part, dedicated
towards more Q2 initiatives, then problems will be spotted early enough for their impact to be
future and preparing mitigated and similarly, opportunities will be identified soon enough for them to be exploited.
accordingly
It is a significant challenge to ensure that a Q1 thinking culture doesn’t become pervasive in
responding to the ever-changing compliance landscape. Convincing board colleagues that a
compliance initiative represents an opportunity may be difficult, but will ultimately prove
rewarding.
Building a case for a broader perspective can be done by adopting a typical business analyst’s
process worldview. Take a step back and look at the whole situation, at both the upstream and
downstream implications of the problem. Conduct root cause analysis to get to grips with what
is manifesting itself in the shape of the problem. Make this insight part of the information pack
provided to decision makers. Inform them that in fixing the current problem, if we also analyse
certain other areas we will be able to identify inefficiencies and thus improve overall
profitability in a number of ways.
Driving forward into Q2
Q1 activities will never go away, but we feel that spending 100% of your time on these
activities is not sustainable. Q2 behaviour generates understanding, perspective and clarity,
likely resulting in fewer crises. In short, fortune favours the prepared. Organisations that move
their compliance activities towards this quadrant will generate more benefit from compliance
spend making it easier to both take advantage of business opportunity and respond to new
compliance requirements.
Make no mistake that moving from surviving to thriving will require a cultural shift within
your organisation. For years organisations have been reacting to compliance changes. By
driving this cultural shift you will notice that your organisation will become more visionary
and less reactive, and in today’s ever-changing compliance landscape being on the front foot
can only be a good thing.
A long term culture of proactively analysing the regulatory landscape will allow companies to
continually innovate in this space and not only be first to implement regulatory compliant
processes but also the first to market with the most rigorous, efficient and effective processes
At BSG we are passionate
about design and delivery BSG (UK)
of change that makes a
We’ve observed that compliance projects are often maligned as mere tickbox exercises. By
difference for our contextualising the projects and understanding the opportunities they offer, we believe that
customers and their compliance is both interesting and important. We talk about this in more detail at
customers. http://bit.ly/cancompliancebeinteresting
A collection of BSG (UK) BA practitioner www.bsgdelivers.com // @bsguk
insight can be found at +44 20 3416 6400
http://bit.ly/bsgukinsight info@bsguk.co.uk
Business Systems Group (UK), Registered in England No. 6150570, 230 City Road, London, EC1V2TT