What Does a Chief Compliance Officer Do?
All organizations need someone to keep them in line with the law, and that is where the services of compliance officers are required.
By definition, chief compliance officers are professionals who ensure that their company is following the law. Their roles vary depending on the industry, but all companies need to have them because they’re responsible for making sure everything goes according to plan and no laws or regulations are broken.
For example, an organization might hire someone with experience working at the Securities Exchange Commission (SEC) if it were considering going public; this would be necessary since securities-related regulation varies from country to country.
Let’s learn some more.
What Does a Chief Compliance Officer Do?
A chief compliance officer oversees a company’s efforts to stay compliant with all regulations. Moreover, they are in charge of designing and implementing compliance programs that will ensure regulatory compliance is met, as well as educating employees about the types of issues they may face.
Corporate compliance for organizations means following the rules and regulations that govern their business. It is primarily concerned with staying within the boundaries set by various legislation — chief compliance officers ensure that these limits are followed while balancing important considerations like employee morale and productivity goals.
1. Roles and Responsibilities
In general, you’ll see a CCO in the following roles:
- They are responsible for making sure that an organization is following all government regulations and industry best practices to avoid fines or other penalties
- Depending on what type of business you’re in, they may handle a wide range of activities from setting up international operations to following compliance requirements
- In some cases, the officer might oversee an internal audit department, but one thing they don’t do is auditing work themselves; instead, they delegate it out to someone else who does audits as their main obligation
- As part of their risk management efforts, they identify risks of non-compliance within an organization and mitigate them as soon as possible.
2. Duties and Tasks
Adherence to the law is above all else, but a CCO should bear critical analytical skills to avoid putting their organization in a difficult position.
On most days, you’ll find them:
- Briefing the CEO, CFO, and CIO about compliance-related news and reports
- Developing, implementing, and ensuring adherence to the organizational policies on ethics and integrity
- Ensuring that all staff are aware of their responsibility in complying with legal requirements
- Monitoring or evaluating data security risks associated with electronic information systems to minimize unauthorized access, use, or modification. It includes: assessing the effectiveness of current safeguards; designing new measures; identifying potential vulnerabilities through penetration testing (i.e., “hacking”); conducting periodic reviews, evaluations, and tests using computer simulations (“war games”)
- Maintaining records relevant to compliance obligations including documentation establishing an entity is entitled to transact business within a certain jurisdiction
- Preparing data for all stakeholders informing them of the risks involved and taking preventive action
- Training human resources and various other departments instilling in them the knowledge of the law and how to abide by it
3. Qualifications and Skills
On the whole, a chief compliance officer possesses the following skills and qualifications:
- A bachelor’s degree in the field of law is required. A Juris Doctor (JD) degree, which takes four years to complete at most colleges and universities, is preferred but not necessarily required. Apart from being qualified on the legal side, they have to be good at business administration to connect with their peers seamlessly.
- One must have extensive experience working with compliance issues within an organizational setting; however, it does not need to be specifically related to the industry they are applying for as long as there has been substantial work done on understanding various federal or state regulations. For example, knowledge of GDPR Data Privacy Regulations from Europe would apply throughout North America once enforced by their respective authorities.
- The CCO candidate must be skilled in various computer tasks and Microsoft office products such as Word, Excel, Outlook PowerPoint, and SharePoint.
- A good understanding of compliance standards is also needed to keep the company up to date with state regulations, for example, 401k requirements or healthcare-specific requirements from different states
- Elaborate research experience will allow you to stay up-to-date on all of the areas so that no one can say, “I didn’t know.”
- You must be a strong leader, problem solver with excellent communication skills. After all, you have to work with executives as well as stakeholders throughout the company.
- Finally, you should bear excellent interpersonal skills to develop trust with federal bodies.
If you’re looking for a job in compliance, you should know that they hit six figures more often than not. Let’s take a look at a CCO’s salary data from different sources:
- The study by Glassdoor found that on average they make around 117–120 thousand dollars yearly with an estimated 15 people responding anonymously to their survey who reported they were working as CCOs.
- PayScale — according to their salary reports, they can earn about $120K per year. On average, they receive an additional $20k in bonuses and approximately 8% profit sharing as well for total compensation of around 146 grand annually.
- Salary.com — writes their average salary to be $240,701 annually. Typically, the salary ranges from $197,301 to $291,601 in the United States.
Their salaries are not the same for every organization and depend on the industry and organization they work in. For instance, in the financial sector, they earn more considering the additional compliance standards they have to meet. Alternately, in the retail industry, they won’t have to put up with that, therefore, earning somewhat less.
How to Become a Chief Compliance Officer?
There’s more to it than just academic qualifications. All chief compliance officer positions are executive-level posts. To reach this prestigious position requires years of experience and a variety of skills. Here, we’ll break it into steps to know exactly what’s required to become a CCO.
- The first step is to get a college degree. This could be in accounting, business administration, law, or another field that will prepare you for this career path.
- The second step would involve finding an employer who needs someone with your skillset and experience to fill a chief compliance officer position. There are many different ways one can find such opportunities; some examples include doing research on company websites, networking at annual conferences, using social media (e.g., LinkedIn), seeking out employment agencies specializing in helping people looking for positions like yours, etc.
- Once you have found potential employers/job openings that look promising from either their website or by other means mentioned above, start applying to them.
- Normally, it begins in the legal department, where you serve as a junior officer. In the course of a few years, when you become part of the senior management, you can apply for the position of chief compliance officer.
Chief compliance officers are key players in preventing corruption and fraud within a company. They must know the industry-specific laws, rules, regulations before applying for any job because this is what will set them apart from other candidates with similar skills or educational backgrounds. Furthermore, it’s necessary to establish relationships with regulators, regulatory setups, and the State Bar Association.
Chief Compliance Officer vs. General Counsel
An executive chief compliance officer is sometimes confused with the general counsel in terms of what they do. The head of the legal department, a company’s general counsel oversees all litigation and other regulatory matters for their employer. Whereas, the chief compliance officer makes sure that employees are following policies set by these departments to stay compliant within laws or standards such as GDPR.
- The Chief Compliance Officer is responsible for monitoring and ensuring ongoing employee compliancy to regulatory requirements (such as HIPAA)
- A General Counsel reports directly to top management; while the chief executive officer may occasionally report up through his/her general counsel on an issue (involving something like new healthcare legislation), most communication between them will be confidential and internal
Qualities of a Distinguished CCO
Not every CCO can stand out and deliver; here are some of the qualities to nurture and excel in an organization.
- Keep up with the law and constantly educate yourself on new regulations so you can be prepared for any changes
- Communicate to your team that their job is important and what they do matters
- Lead by example, follow all policy standards even if it’s inconvenient or difficult
- Listening skills are key. You have to provide a space where employees feel like they can report anything without fear of retaliation while also encouraging them in doing so
Candidates interested in taking up the role of a chief compliance officer should have a passion for law and regulations, as well as being prepared to make unpopular decisions.
For businesses looking to hire someone in this position, you must find somebody who knows how your company does business internally.
This person needs to be able to identify risks before they become problems so you can take steps towards mitigating them. Failing this step could lead to heavy fines or other penalties from government agencies.
If a CCO is making sure people are following all laws; protecting against regulatory enforcement actions by “deterring” violations through training and supervision; identifying risks related specifically to their organization’s operations, and helping mitigate them, then they are the right person for the job.