BREAKING BOUNDARIES AND BUILDING BRIDGES: THE DANCE OF COMPLIANCE AND ENTERPRISE RISK MANAGEMENT
It is not easy to dance. Especially with a new dance partner. You need to align your moves and rhythm and you tend to step on each other’s toes a lot in the beginning, getting hurt in the process. It is not pretty to look at for the audience. Sometimes, it is just easier to put on a good song and dance by yourself.
The same applies to the collaboration between the compliance function and the enterprise risk management (ERM) function in most companies. If the functions are separate, at least in the beginning and depending on the manager of each function, collaboration can be difficult, and toes are stepped on. Sometimes, it is just easier to merge the two functions and dance by yourself.
How most successful expanding companies develop over time is to start with few people wearing many hats and evolve into many people wearing fewer hats. To deal with the ever-growing array of regulations, risks and complexities, new teams and departments are created, developing into separate functions such as legal, compliance, ERM, insurance, procurement and quality, among others.
In this article, the case is made for any company that has separated the two functions of compliance and ERM, to merge the two – but, at the same time, acknowledging the factors, outlined below, which make a merger challenging or even a bad idea.
Jan-Mar 2024 Issue
Bang & Olufsen