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Volume 27, Issue 3

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May 15, 2013

Making the Bottom Line Case for Compliance: The ROI of a Robust Compliance Department

In recent years, companies—public companies in particular, but private companies as well—have increasingly created standalone compliance functions to guide, monitor, and measure adherence to company ethics policies, as well as myriad laws and regulations, including those relating to fraud and corruption. As compliance offices expand globally and take on more authority, personnel, and responsibility, they also become more visible cost centers in the organization. A question that may be increasingly asked of compliance officers is how they are defining and measuring value. In short: what is the return on investment (ROI) of their departments?

Capturing this ROI in a detailed and effective manner can be elusive. It is self-evident that compliance functions exist for the purpose of preventing and detecting violations of law and company policy and promoting a culture of compliance, but how can that be measured with any degree of reliability? Specifically, there is the difficulty of proving a negative: how does a company quantify what might go wrong—or would have gone wrong—had the company not invested in compliance initiatives?