This article originally appeared in Thomson Reuters, April 12, 2023.

The U.S. economy saw more layoffs in the first quarter of this year than in any other single quarter in more than a decade. Within that same period, the second biggest-bank failure in U.S. history signaled international economic alarm bells. These conditions have cultivated an environment for heightened risk and fraudulent activity.

In this environment, robust and proactive compliance infrastructure is imperative to safeguard businesses and the broader macroeconomic landscape. U.S. Deputy Attorney General Lisa Monaco recently called on today’s business leaders to prioritize corporate compliance — not only to uphold the rule of law, but to recognize the role of compliance in strengthening financial markets and protecting national security.

At a time when internal budgets are being squeezed, the Department of Justice is doubling down on policy-driven strategies to hold both organizations and their leadership accountable “to promote and support a culture of corporate compliance,” she said. For workplaces today, where culture is key, Monaco’s remarks on safeguarding the business with a tenacious compliance and risk management posture are critically important.

Striking a healthy balance

Corporate departments and business units are often considered either as a cost center or profit center. During times of heightened economic pressure, unsurprisingly, the cost centers are often the first to be assessed for possible budget freezes or cuts to boost cost savings. In most organizations, the risk & compliance function is perceived as a cost center.

However, the role of an effective head of compliance is to communicate the importance of the compliance department and approach the role of the function as not only as a cost center, but as a way to drive business development and revenue. This requires striking a healthy balance between compliance and other leadership teams, articulating the business value of building a robust compliance program that assesses and mitigates risk.

A successful compliance program is designed around a heat map-like calculation, an exercise that evaluates the likelihood of risk against the impact of the stated risk. Adept compliance leaders will assess the industry environment, scan the horizon, and determine how certain variables might manifest as risks within their own organizations. This exercise is fundamental to quantify — and justify — the budget of a sophisticated compliance program that is equipped to safeguard the business.

Establishing a workplace compliance culture

Prioritizing compliance is not exclusively the role of the company’s compliance officer; in fact, if the compliance team is the only function of the business thinking about compliance and implementing the appropriate controls, the organization is not set up for success. From the senior leadership and board of directors, down to the roots of the organization, all employees are responsible for contributing and upholding a culture of integrity and compliance.

The top-down implementation of policies and expected behaviors, supported by good line management, can promote a more compliant and consistent approach across the business to better create a positive risk management culture. Establishing a strong culture includes fostering an entire organization’s approach to compliance, ensuring proportionate and cost-effective use of resources, and supporting efforts to build a dynamic and inclusive organization by promoting a speak-up culture.

Just as it is the role of all employees to strive towards annual business targets, so too is their role in upholding the organization’s compliance and ethics initiatives. It is equally important for organizations’ heads of sales to prioritize risk management and compliance as it is for heads of compliance themselves. The commitment to remain compliant is the responsibility of the entire organization.

The changing role of the compliance officer

The need to establish a robust compliance program, backed by a workplace culture that prioritizes de-risking and integrity, has become increasingly important for businesses today as policy and regulation continue to evolve. In February, a judge’s decision in a derivative lawsuit in Delaware to allow a shareholder lawsuit to go forward against a former McDonald’s Corp. HR leader set a meaningful industry precedent, another signal in recent regulatory activity that is continuing to shift accountability from the organization alone to include individuals as well.

This evolution of accountability over the last several years has been one of the most fundamental transitions in the role of the corporate compliance officer. Most importantly, this shift has changed how compliance leaders interpret their role and responsibility to the organization. When an individual is personally on the hook, it magnifies the context of accountability.

Coupled with this transformation is the U.S. government’s growing expectation to see data-driven approaches to compliance. Regulators increasingly require proof, backed by data and analytics, that a robust compliance program is in place and reinforced by a compliance-first culture.

Like most business functions, the increased use of technology and data has streamlined processes and accelerated efficiencies within compliance. Specifically, compliance leaders who are taking a more proactive approach to controls are looking to leverage data in order to understand how to better allocate limited resources across the business to areas that may be more at risk. As technology becomes even more sophisticated, so too does the expectation of the compliance officer’s responsibility to leverage it.

Compliance as a business driver

The most ethical and stable organizations are the ones with leadership teams that accept the ownership of risk, establish programs to mitigate risks, and leverage the compliance team as a vital resource to run the business more successfully. Especially as economic challenges persist, it is a business imperative that organizations — across all levels and functions — are committed to compliance.

At this year’s National Institute on White Collar Crime hosted by the American Bar Association, Deputy AG Monaco spoke about these recent policy changes that seek to promote cultures of corporate compliance and reinforce the personal role of individuals. “These policies empower general counsels and compliance officers to make the case to company management, to make the case in the boardroom that investment in a robust compliance program, including a forward-leaning compensation system, is money well spent,” she said.

While this is true in any climate, it is especially critical in today’s macroeconomic landscape. Indeed, it is the role of the corporate compliance officer that breathes this ethos into the organization to not only safeguard the business but to continue driving it forward.