There is a maxim in business that to be successful there must be clear ownership of specific priorities in order to ensure accountability for performance in pursuit of the desired outcomes. That is in fact what we found to be true when we surveyed companies as part of our research for our second white paper, “The 7 Best Practices of Leading Traders”.
These firms were unequivocal about the important role of corporate leadership in driving the implementation of compliance-related priorities across the organization. The reasons for this can be categorized as follows:
Compliance Links with Corporate Philosophy
The board of directors and senior management are ultimate responsible for the “tone and the top” and more specifically, the mission, vision, and values of the organization.
Globally active firms understand that compliance with international and domestic regulations at all levels needs to be part of the corporate doctrine of expected behavior. This is not only because it is a legal requirement, but because it is simply the right thing to do and links directly with brand integrity and the promises made to all stakeholders.
Compliance Links to Corporate Strategy
Boards and senior leaders of companies at the forefront of adapting to global trade have identified trade compliance as a priority that links to the organization’s strategic plans, risk management framework, and protection of the brand’s integrity.
Strategy by its very nature involves a clear understanding of the trade-offs between investment and return, risk and reward.
Viewed as an integral component of the company’s strategic direction and overall plan, boards and senior leadership must be keenly aware not only of the manifold exposure to new risks posed by global trade, but likewise appreciative of how the complex array of challenges has the potential to create distinct competitive advantage.
Compliance-savvy organizations anticipate compliance consequences and outcomes as part of the strategic planning process, so there is clear visibility to current and emerging risks and opportunities that could compromise or support targeted outcomes.
Because of the complexity and diversity of the trade compliance agenda, beyond high-level oversight, it is not realistic or practical for senior leadership to take a hands-on role to ensuring all the compliance components are identified and managed on a day-to-day basis.
There needs to be a direct reporting link to senior management on specific trade compliance performance indicators, and clear visibility to current and emerging risk that may comprise financial results, or cause damage to the enterprises reputation.
Unfortunately, trade compliance is often exclusively attached to the supply chain or logistics silos of the company from a functional perspective. As a result risk mitigation strategies are largely reactive; that is to say, addressing issues after they have become a reality or when there is a threat of clear and evident consequence.
The firms we surveyed who are successfully navigating global trade appoint an individual or team to own this important priority, and to work across business functions.
Their involvement spans the full business cycle from the strategic planning or scenario assessment stages, through to the full operational implementation and ongoing vigilance.
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