Digital transformation isn’t just for development and production. Compliance officers can also transform the nature of their work by leveraging digital solutions to weave compliance data management and reporting into the organizational fabric.
As companies prepare to implement new technologies, compliance officers who participate in system design and development can advocate for process improvements. Leadership recognizes the huge risks that compliance lapses pose, and they understand how costs can pile up as staff and representatives labor to satisfy regulators. They can appreciate the potential benefits of digitized compliance and welcome the CCO’s participation throughout the planning process.
A digitized compliance operation can deliver tremendous business value in a complex organization. Analysts and specialists can systematically monitor key areas of activity, accumulate necessary data and documentation, and accelerate the generation of reports and audit trails. Regulatory relationships improve, instances of violations and penalties decrease, and excess expenses are squeezed out.
Here are some of the key values that digital transformation can deliver in compliance.
Reduce risk. Regulatory non-compliance is the number one risk factor for many energy companies. Employees operate in vulnerable environments, and risk factors span third-party relationships, finance, health and safety, CAA, import-export, FCPA, and countless other regulatory thickets. Failure to comply on any front can lead to costly fines, expensive proceedings and litigation, damage to reputation, and worse. CCOs who digitize operations can shift out of reactive mode and adopt a preventive approach. They can reduce risks by gaining vision into the organization, automating data entry and storage, and simplifying reporting processes. Regulatory relationships improve as the organization accelerates its response to record checks and other requests from regulators and auditors.
Reduce direct costs. Depressed commodity prices and shifts in demand have created turmoil throughout the energy value chain and placed tremendous pressure on leadership. Resources are scarce, but regulatory scrutiny never seems to decrease, which leaves CCOs struggling to balance the competing demands for risk management and cost control. Digital transformation is the best path forward: By implementing controls and improving data entry, CCOs can automate processes, speed data retrieval, and reduce the instance of expensive reviews, audits and report production.
Support colleagues. Energy companies throughout the value chain deal with multiple complex regulatory requirements, and employees at all levels need to understand the rules that apply to their work. Digital transformation affords an opportunity to reduce risk by disseminating information and adopting procedures that support compliance. A CCO can identify high-risk activities and operations and work with IT to build in support and data entry processes that help employees avoid pitfalls and fulfill company obligations. It makes sense to evaluate the real-world compliance challenges that employees face, such as onerous data entry procedures and lack of access to information and IT services in the field, and advocate for process improvements that protect the organization.
Eliminate paper. Paper-based records are an anomaly. Employees may be required to furnish regulators with printed documents, but energy companies cannot afford to rely on paper-based files or scans. Staff and representatives need access to information to compile reports, and costs go out of control when they spend precious hours digging through file drawers, poring over records and re-entering information that is already in hand. CCOs who pursue end-to-end digitization can recommend automated processes to obtain and prepare data and deliver timely information. By providing immediate access to information, the organization simultaneously reduces compliance risks and wrings out unnecessary costs. Digitized information is easier to search and retrieve, making it more relevant and valuable for analysts, specialists, accountants, attorneys and other parties. The CCO can gain real-time visibility into operations and manage proactively with the help of exception-based monitoring.
Manage complexity and change. Ensuring compliance is a momentous task in an energy company that operates in multiple jurisdictions with location-specific rules and complex stakeholder and business relationships. Each agency in each location imposes unique requirements, and one CCO may oversee reporting on trade restrictions, corrupt practices prevention, greenhouse gas emissions and equipment inspections. Not only do regulatory requirements change, but the organization may be moving into new activities that introduce new risks and requirements. Digitization of information and procedures helps the CCO gain visibility into every corner, improve internal controls and ensure that complex compliance needs are met.
Improve audit trails. When information is digitized and searchable, audit trails occur organically and are easy to document.
As energy companies transform operations, CCOs have an excellent opportunity to modernize and streamline compliance activities. By getting a seat at the table during planning and design, compliance officers can demonstrate the value of digitized compliance operations and take a role in designing IT systems that give the organization a competitive edge.
By John MacKenna, Energy Writer