The Compliance Function ensures that a business operates within the boundaries of applicable laws, regulations, and internal policies. Historically, it was a reactive function focused on avoiding legal breaches and regulatory penalties.

Today, compliance is a strategic enabler of business integrity, operational resilience, and stakeholder trust. It is no longer just about “not breaking the rules” – it’s about embedding ethical conduct, risk awareness, and regulatory alignment into the DNA of the business.

Compliance is the guardian of corporate legitimacy. It ensures that the business can operate, grow, and innovate without regulatory friction. It is also a key interface between the business and regulators, often shaping how the business is perceived externally.

A well-functioning compliance function is a competitive advantage – it protects reputation, enables market access, and reduces the cost of regulatory engagement.

The Compliance Function is important to the Business for the following reasons:

◼️ Regulatory Survival: ensures the business can legally operate in its chosen markets

◼️ Reputation Protection: shields the business from reputational damage due to non-compliance

◼️ Risk Management: identifies and mitigates regulatory and ethical risks

◼️ Market Access: enables entry into regulated markets

◼️ Investor Confidence: reassures investors and stakeholders of sound governance

◼️ Operational Integrity: ensures business processes align with legal and ethical standards

◼️ Crisis Prevention: reduces the likelihood of regulatory investigations and enforcement actions

◼️ Board Assurance: provides assurance to the board on legal and regulatory exposure

An optimised Compliance Function delivers the following value to the Business:

◼️ Reduced Regulatory Risk: fewer breaches, fines, and investigations

◼️ Enhanced Reputation: builds trust with customers, regulators, and investors

◼️ Operational Efficiency: streamlined compliance processes reduce friction

◼️ Cost Avoidance: avoids penalties, litigation, and remediation costs

◼️ Strategic Enablement: supports compliant innovation and market expansion

◼️ Board Confidence: enables informed decision-making at the highest level

◼️ Data-Driven Oversight: provides insights into compliance trends and risk hotspots

◼️ Cultural Alignment: embeds ethical conduct across the organisation

The best practice features of an optimised Compliance Function include:

◼️ Compliance Framework: a documented compliance policy and risk framework

◼️ Regulatory Mapping: clear mapping of applicable laws and regulations

◼️ Compliance Register: a centralised register of obligations and controls

◼️ Training Programs: regular, role-specific compliance training

◼️ Monitoring & Auditing: proactive monitoring and internal audits

◼️ Incident Reporting: clear whistleblower and incident escalation pathways

◼️ Policy Management: centralised policy repository with version control

◼️ Compliance KPIs: measurable indicators of compliance performance

◼️ Board Reporting: structured compliance reporting to senior management

◼️ Third-Party Compliance: due diligence and monitoring of vendors and partners

◼️ Legal Tech Tools: tools for regulatory tracking, policy automation, and reporting

◼️ Regulatory Engagement: structured approach to regulator interactions

◼️ Ethics Integration: alignment with corporate values and ethical standards

A poorly optimised Compliance Function will give rise to the following inefficiencies:

◼️ Regulatory Breaches: increased exposure to fines, sanctions, and litigation

◼️ Reputational Damage: loss of trust among customers, partners, and regulators

◼️ Operational Disruption: reactive firefighting and business interruptions

◼️ Board Anxiety: lack of visibility into compliance risks

◼️ Inconsistent Practices: fragmented compliance efforts across departments

◼️ High Remediation Costs: expensive fixes after compliance failures

◼️ Poor Staff Awareness: low understanding of compliance obligations

◼️ Tech Misalignment: inability to leverage tech due to poor process foundations

The Compliance Function is increasingly tech-enabled, with major productivity opportunities including:

◼️ RegTech Platforms: tools for regulatory tracking, alerts, and reporting

◼️ Policy Automation: automated policy creation, distribution, and attestation

◼️ Training Portals: e-learning platforms for compliance education

◼️ Incident Management Systems: digital tools for reporting and tracking breaches

◼️ Audit Tools: software for compliance audits and control testing

◼️ Dashboarding: real-time compliance dashboards for management visibility

◼️ Third-Party Risk Tools: platforms for vendor compliance monitoring

◼️ Document Management Systems: centralised policy and procedure repositories

Tech success depends on process maturity – if your compliance processes don’t work offline, they won’t work online.

Explore the critical enablers of a high-performing Compliance Function via the GLS Legal Transformation Tube Map.

Visit the next station: Group Legal Policy – Compliance
Or return to the overall GLS Legal Transformation Tube Map.

The GLS Legal Operations Centre contains everything you need to optimise your compliance function – or contact GLS to book a consult and we’ll help you build a compliance function that protects and empowers your business.