strategic planning for compliance
TRANSCRIPT
![Page 1: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/1.jpg)
Chicago Compliance GroupChicago Compliance GroupFebruary 8, 2010
Strategic Planning for Compliance
Ann OglanianCEO and PresidentCEO and PresidentReGroup, LLC
![Page 2: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/2.jpg)
The Problem
How do we get it all done?gHow do I get some help?
The Solution
Translated strategic planningConnect to the businessSpeak their languageReSet ExpectationsReSet Expectations
2©ReGroup, LLC 2010
![Page 3: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/3.jpg)
Presentation Overview
Part OnePart One•Why do strategic planning?•The 5 Step Process for Planning
Part Two•Strategic Planning
Part Three:•Getting Buy-inMeas ring progress•Measuring progress
Part Four: •Discussion – identifying and communicating the value of compliance
3©ReGroup, LLC 2010
![Page 4: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/4.jpg)
There is nothing so useless as gdoing efficiently that which should not be done at all should not be done at all.
~Peter F. Drucker
4©ReGroup, LLC 2010
![Page 5: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/5.jpg)
YOUSuccess is Linked
YOU
Compliance ProgramProgram
Your Firm
The Industry
Regulation
5©ReGroup, LLC 2010
![Page 6: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/6.jpg)
Your Skill Set
Actual vs PerceivedActual vs. PerceivedTechnical skills get you in the game; conducting yourself professionally leverages your chances of winningwinning#1 Problem area: Communication skillsHow can strategic planning increase your credibility
6©ReGroup, LLC 2010
![Page 7: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/7.jpg)
The Mindset
Why and how to define your jobWhy and how to define your jobWhat does success look like?
•
•
•
•
Wh t d it t b ff tiWhat does it mean to become an effective compliance professional?How do you measure success?
7©ReGroup, LLC 2010
![Page 8: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/8.jpg)
Time Analysis: Current (%)
8©ReGroup, LLC 2010
![Page 9: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/9.jpg)
Matching Allocation to Priorities
9©ReGroup, LLC 2010
![Page 10: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/10.jpg)
Why Do Strategic Planning?
Powerful tool to help define your own successPowerful tool to help define your own successEffective execution and measurable resultsFocus on the right issues Create consensus Credibility:
• Holding yourself to a high standard of accountability• Effective commutating in “CEO”
C t titi d t f fiCreate a competitive advantage for your firmMake a strong (and successful) argument for resources
10©ReGroup, LLC 2010
![Page 11: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/11.jpg)
Why Create a Written Document?
CredibilityCredibilityMeasurabilityClarity – basic management and disciplineEvidence – to meet the “show me” standardEvidence to meet the show me standard To share with others
11©ReGroup, LLC 2010
![Page 12: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/12.jpg)
Who are Your Constituencies?
Internal ClientsInternal Clients• Supervisory functions/Business Units
Control groupsManagementCompliance Steering CommitteeCompliance staffRegulatorsSh h ldShareholders
12©ReGroup, LLC 2010
![Page 13: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/13.jpg)
Using Your Constituencies for Planning
Information Gathering PhaseInformation Gathering PhaseParticipating in the planning process
• Represent business units?• Represent control groups?Represent control groups?
Participating in the Buy- In Process
13©ReGroup, LLC 2010
![Page 14: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/14.jpg)
The Five Steps of Strategic Planning
Step 1: Identifying Issues/Risks
Annual Review resultsPast, Present and Future Business
• Growth in assets and complexityGrowth in assets and complexity• New product development• Expertise and capacity• (Pre-Step 1: gather information on the direction of your
firm)firm)SEC best practices
14©ReGroup, LLC 2010
![Page 15: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/15.jpg)
Identifying Issues
The SWOT AnalysisThe SWOT Analysis• Strengths (internal)• Weaknesses (internal)• Opportunities (external)Opportunities (external)• Threats (external)
Factors that are both STRENGTHS (internal) and OPPORTUNITIES (external) = a potential area for growthFactors that represent WEAKNESSES (internal) and threats (external) = require action
15©ReGroup, LLC 2010
![Page 16: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/16.jpg)
SWOT AnalysisStrengths Weaknesses
O t iti Opportunity OpportunityOpportunities Opportunity-Strength (OS)
Use strengths to take advantage of
Opportunity-Weakness (OW)Overcome weaknesses by taking advantage
Internaltake advantage of opportunities
taking advantage of opportunities
Threats Threat-Strength Threat-Weakness (TS)
Use strengths to avoid threats
(TW)
Minimize weaknesses and
Externalavoid threats
16©ReGroup, LLC 2010
![Page 17: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/17.jpg)
SWOT Analysis
Strengths Weaknesses
Internal
Opportunities Threats
External
17©ReGroup, LLC 2010
![Page 18: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/18.jpg)
Step 2: Prioritize Issues
Not every issue deserves the same weight; you must prioritizeNot every issue deserves the same weight; you must prioritize because you cannot do everything at once.Factors:
• Business goalsSEC i t t• SEC interests
• Patterns of conduct• Change• Intuition• Intuition
Value judgments
18©ReGroup, LLC 2010
![Page 19: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/19.jpg)
Don’t Be Tempted to…
Demote issues thatDemote issues that…• You don’t know how to address• You think will be expensive…(cost comes later)• Relate to senior managementRelate to senior management
Give priority to issues that are…• Arguably petty or unsupportable• That already have overbuilt solutionsat a eady a e o e bu t so ut o s
19©ReGroup, LLC 2010
![Page 20: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/20.jpg)
Step 3: Match Objectives to the Risks
Define Categories:Define Categories:• Compliance Process:
P&PTrainingE l tiEscalationExceptions
• Substantive areasDeliverablesDeliverablesMilestones/Calendaring
20©ReGroup, LLC 2010
![Page 21: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/21.jpg)
SMART Plan
SpecificSpecificMeasurableAccountableAccountableRealisticTime-Bounded
21©ReGroup, LLC 2010
![Page 22: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/22.jpg)
Step 4: Identify Necessary Resources
Executive AttentionExecutive Attention• Corporate Governance: who decides?
Legal resourcesHR resourcesTechnology resourcesEducation and TrainingProject ManagementN t kiNetworkingInternal vs. External
22©ReGroup, LLC 2010
![Page 23: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/23.jpg)
Resources Necessary for Success
ExpertiseExpertise• Professional services• Possible selection of counsel with expertise in investment
managementPeople
• Add a full time junior operations person with industryAdd a full time junior operations person with industry experience
• Outsource accounting; requires research to identify the appropriate candidate
Technology• Resources appear to be adequate; utilizing existingResources appear to be adequate; utilizing existing
technologyEducation
• Internal time from colleagues to our consulting model and the due diligence process
• On-going coaching• On-going coaching• May consider a compliance certification (Q4)
23©ReGroup, LLC 2010
![Page 24: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/24.jpg)
Step 5: Identify Costs of the Initiatives
Dollars $$$Dollars $$$Employees – “FTEs”• Compliance Department• Other DepartmentsOther Departments
TimeTechnology/SystemsOutside Counsel/ConsultingOuts de Cou se /Co su t gBenchmarking
24©ReGroup, LLC 2010
![Page 25: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/25.jpg)
Leveraging Leadership Within Compliance
Compliance Plan Which Is Adopted By ManagementCompliance Plan Which Is Adopted By ManagementGoals and Objectives for Each Compliance Sub-unitIndividual Success Criteria Which Feed Into Group Goals
25©ReGroup, LLC 2010
![Page 26: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/26.jpg)
Setting StandardsExpectations for Compliance Professionals
Conduct compliance responsibilities in accordance with the highest p p gethical standards;Demonstrate knowledge of the firm’s technical compliance requirements;Know the role of the compliance department;Demonstrate knowledge of the firm’s business;Conduct compliance responsibilities in a consultative and professional manner;Be pro-active, inquisitive, able to exercise professional skepticism, and able think critically;Contribute to the identification, assessment and mitigation of complianceContribute to the identification, assessment and mitigation of compliance risk;Assist in the creation of policies and procedures to address the identified risks; Properly and appropriately escalating compliance issues; andP ti i t i t i i d t ff t t d l d i l tParticipate as appropriate in industry efforts to develop and implement good compliance practices for advisers
26©ReGroup, LLC 2010
![Page 27: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/27.jpg)
Buy-In Process
Create a management structure that has oversightCreate a management structure that has oversight• Requirement of a Compliance Steering Committee
Mindset: Support vs. ControlPresent the planPresent the plan
• Requested feedback• Asked them to ratify the plan as the firm’s plan
Set expectations by defining successSet e pectat o s by de g successIf all else fails…call it an ‘experiment’
27©ReGroup, LLC 2010
![Page 28: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/28.jpg)
Sample OutlineCompliance Department Mission Statement
4. Supervisory Structure and AccountabilityStatement
Standards of Conduct for Compliance ProfessionalsParticipantsCompliance Credentials
Accountability5. Administration of the Compliance
Program6. Substantive Issues
Compliance CredentialsBackground
• Change• Progress on Previous Plan
A. Books and RecordsB. Trading and Portfolio
ComplianceC. Code of Ethics
Risk Analysis Key Issues (Prioritized)
1.Inspection and Enforcement2.Culture of Compliance
D. New Product/Instrument/Client Type
Required ResourcesCost Anal sis
p3.Risk Identification and Mitigation
Processes
Cost Analysis
28©ReGroup, LLC 2010
![Page 29: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/29.jpg)
Process
Reviewed business modelReviewed business model• Client type, investment mandate• Historic and anticipated growth
Reviewed documents: how we present ourselves in writingReviewed documents: how we present ourselves in writing• Model RFP, Form ADV, IA Agreement, written policies and procedures, sales presentation
Reviewed current time allocation for SabrinaSWOT AnalysisIdentified key operational/compliance risk areasDeveloped alternative mitigation solutions for consideration
©ReGroup, LLC 2010 29
![Page 30: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/30.jpg)
Strategic Planning in Five Steps
• Identify risks based upon conflicts of1
Identify risks based upon conflicts of interest
• Prioritize risks2 • Prioritize risks
3• Mitigate Risk
Link key initiatives and objectives: a “SMART” Plan3 Link key initiatives and objectives: a SMART Plan
4 • Assign Resources and Budget
5 • Report on progress
30©ReGroup, LLC 2010
![Page 31: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/31.jpg)
Communicating the Plan
The compliance program may be considered ‘just overhead’The compliance program may be considered just overhead• Various departments may be asked to contribute to and support the plan with time and money
Consider a mini-PR plan for your Strategic PlanC li D t t• Compliance Department
• Compliance Committee• Executive Management• Various Department Meetings – 10 min• Various Department Meetings – 10 min
Wash, rinse, repeat…good messages bear repetition
31©ReGroup, LLC 2010
![Page 32: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/32.jpg)
M k Y Id Sti kMake Your Ideas Sticky
Compliance ideas are not naturally sticky…or interesting…Sticky = effective
Six Principles of Stickiness 1. Simple2. Unexpectedy
The Curse of Too Much KnowledgeEver try humor?ReGroup Recommended Reading:
• Made to Stick Chip Heath and
p3. Concreteness4. Credentialed 5. Emotional6. Story• Made to Stick, Chip Heath and
Dan Heath y
SUCCESs
©ReGroup, LLC 2010 32
![Page 33: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/33.jpg)
Execution: Measurability
Why measureWhy measure• Holding yourselves accountable• Creating expectations
Management• Predictability
ColleaguesDefining your own success
It’ j b ’ th t• It’s your job – you’re the expert• Proactively/empowering compliance
Playing to your strengths
33©ReGroup, LLC 2010
![Page 34: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/34.jpg)
Overhead vs. Value-Added
3434
![Page 35: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/35.jpg)
Overhead vs. Value-Added
Assist in protecting the firm’s reputationAssist in protecting the firm s reputation
Design a compliance program to meet regulatory requirements and improve internal efficiencies
Strengthen client relationships; improve sales and retentionStrengthen client relationships; improve sales and retention
Create transparency by packaging information in a manner designed to enhance decision-making
Reduce regulatory and business risks
Improve individual employees’ efficient execution of their compliance responsibilities
Interact, transact and integrate with vendors
©ReGroup, LLC 2010 35
![Page 36: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/36.jpg)
Credibility: Become a Trusted Adviser
System of compliance must win trust of the boards, employees, y p , p y ,vendors, clients and regulators
Steps to building trust:
Transparent: Open, going beyond current requirements or expectations
Responsible: Clearly acting in the broader and longer term interests of all
Uncompromising: Committed to highest ethical positionSuccessful: Results-drivenTemperate: Structured and executed against risks, avoiding reactionary decisionsavoiding reactionary decisions
36©ReGroup, LLC 2010
![Page 37: Strategic Planning For Compliance](https://reader033.vdocuments.mx/reader033/viewer/2022052900/555b7cf9d8b42aab6c8b5477/html5/thumbnails/37.jpg)
37©ReGroup, LLC 2010