How a CCO Can Successfully Partner with the Board

by Keith Meyer and Craig Donaldson

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How a CCO Can Successfully Partner with the Board

by Keith Meyer and Craig Donaldson

The Chief Compliance Officer (CCO) is a valued voice in the boardroom, working hand-in-hand with the Audit Committee and Risk Committee (if one exists). As oversight of the compliance function is typically part of the Audit Committee’s responsibility, there needs to be close coordination between the committee chair and the CCO to ensure alignment of enterprise-level compliance function priorities and agreement on allocation of compliance resources, with transparent communications and appropriate board-level reporting in place. To make that happen, a strong relationship will need to be forged between the two.

Laying the Groundwork

Before a successful relationship can be developed, the CCO needs to understand (and appreciate) the board’s oversight role. The Audit Committee is there to oversee the company's financial reporting, risk management, and internal controls and keep the company operating above board. The committee chair should set expectations for the CCO; those expectations should be in line with the company’s strategy, goals, and compliance priorities set by the board and the CEO. Together, they should determine how the Audit Committee’s oversight function fits into the overall corporate compliance process.

CRAIG DONALDSON is a Managing Director on Major, Lindsey & Africa's Southeast In-House Counsel and Partner Practice team.

KEITH MEYER is the Global Practice Leader of Major, Lindsey & Africa's Board Services practice.

To meet those expectations, the CCO should be fully versed on the compliance requirements, policies, and guidelines of the regulators, NYSE/NASDAQ, etc. They should also be business-minded and pragmatic in terms of ethics and compliance, quickly addressing compliance gaps found by internal audit activities and providing a second set of eyes, in addition to the Chief Risk Officer, to help identify, report, and mitigate key risks. The board wants to see that the CCO can handle sensitive issues and is capable of focusing on the immediate operational compliance priorities and emerging issues, helping the board see what is coming next from the regulators and other governmental entities.

The CCO must have sufficient resources available to them—and the authority to secure them when necessary—to successfully carry out the duties of the function and meet the board’s expectations. A lack of resources will limit the CCO’s ability to get out of the weeds on day-to-day deliverables and focus on more strategic, proactive, and preventative measures that will lead to significant long-term results.

Building a Strong Relationship

Effective CCOs will prioritize building professional relationships through high-quality leadership and communications with the board members. Ideally, the CCO will regularly brief the Audit Committee chair through one-on-one meetings and in-person catch-ups, especially when significant issues arise. This proactive approach ensures that the CCO can anticipate the needs of the board and provide valuable insights.

The CCO should be confident enough to go to the board directly when needed, know which issues need the board’s attention, and when to take them to the board. Developing an escalation policy and following that protocol will show the board that the CCO has the company’s best interests in mind. They also must be comfortable presenting to the board, explaining complex compliance issues clearly, and providing context for the data. Determining the appropriate level of detail provided to the committee and in full board meeting discussions will show proper discernment—providing not overly detailed presentations but also not leaving out difficult topics or any “bad news” that needs to be discussed. Give the straight story so there are never any surprises for the board later.

The CCO should be confident enough to go to the board directly when needed, know which issues need the board’s attention, and when to take them to the board.

By effectively communicating and partnering with the Audit Committee, the CCO will build trust and accountability with the board.

The CCO must build trust outside the boardroom, too, showing that they support the company's goals and are not isolated from the business. The board wants to see that the internal teams are talking with one another, sharing information, and aligning priorities and culture. The CCO should also be promoting the company’s compliance culture with their external stakeholders and customers.

Keys to Success

The keys to being a successful CCO in the boardroom lie in a blend of strategic thinking, robust communication skills, and a deep understanding of the business's operational priorities. A successful CCO must foster openness and transparency, ensuring that the board is kept well-informed and that no surprises arise. Moreover, the CCO should exhibit flexibility and strong leadership qualities, demonstrating an ability to anticipate the board's needs and respond accordingly. By aligning compliance efforts with the company’s broader goals, and demonstrating a commitment to the overall organizational success, the CCO becomes an invaluable asset, strengthening the trust and accountability within the boardroom.

The role of the Chief Compliance Officer builds indispensable value within an organization by fostering a culture of integrity and transparency. Building robust relationships with board members, particularly through effective communication and regular interactions, is paramount. The CCO's ability to present complex compliance issues concisely and transparently ensures that the board remains well-informed and confident in the company's compliance program.

Moreover, by aligning with internal teams and promoting compliance culture externally, the CCO demonstrates a commitment to the company's broader goals. The keys to success lie in openness, strategic thinking, and a deep understanding of the business's operational priorities. Ultimately, when the CCO is seen as a strategic asset, the relationship between the CCO and the board will thrive, paving the way for enhanced trust, accountability, and organizational success. ■