Adam: Hello and welcome to PwC Canada's newest podcast, Finance in 15, a series that explores finance, transformation and what it means for leaders in the finance function. My name is Adam Boutros and I'm your host. Hello, and welcome back to Season 2 of the Finance in 15 podcast. My name is Adam Boutros and I'm your host. For our new listeners, Finance in 15 is a PwC Canada podcast that explores finance transformation and what it means for leaders in the finance function. Today, we're going to go into an area that's an ongoing challenge for many finance functions, compliance risk. And I'm pleased to have PwC Partner France-Anne Fortin and PwC Partner and Compliance Transform leader Shawn Reain joining us today. Welcome to the podcast, France-Anne and Shawn.
France-Anne: Thank you. Happy to join you, Adam, and be part of this Finance in 15 podcast.
Shawn: Great to be here, Adam.
Adam: OK. So let's start then with you telling us a bit about your roles at PwC, France-Anne.
France-Anne: And so I lead the RM GRC (Risk Management, Integrated Digital Governance, Risk and Compliance) practice in Canada. I work with all types of clients, all different types of industries. My main competency is focused on financial institutions and the risk management and control space.
Shawn: And I'm the market leader in tax, Adam, but also our compliance transformed leader, as you said. I also work with all types of clients that I've been involved in compliance all my career.
Adam: OK, well, I think we have the right people for this conversation then, so let's get right into it, and maybe we can start off by thinking about a finance leader who is wanting to embark on a finance transformation journey. They have a high level vision, and they're really trying to figure out where does compliance fit into the journey. What have you seen out there in the market France-Anne?
France-Anne: It's really pertinent and timely question, Adam. We see many organizations going through the finance transformation and not necessarily appropriately taking into consideration the value of revisiting the various compliance frameworks that they have. Let's start with the basics. Compliance means different things to different people. So when I talk about compliance, I mean the various laws, regulations, contractual obligations, anything your organization has to put in place to meet its business objectives and protect its reputation. Historically, organizations have built their various compliance activities in silos. They needed them and as they matured and as new regulations and new rules came in on board, companies built what they needed to be able to address those. And then there's not too many organizations that took the time to revisit the various obligations, whether it'd be tax, health and safety, you know, 52-109 privacy, all of those various obligations. Not many have taken the time to look at them in a holistic perspective and saying, if we're going to be transforming how we do our financial processes and we're going to be putting in new tools and methodologies, how could we streamline and rethink those compliance objectives? So a transformation project could be a great catalyst to start that process.
Adam: And let's also move on to reporting. So in this changing world finance leaders, they certainly have had to rethink their approach to reporting, thinking about responding to demands for new kinds of reporting, like non-financial information, ESG, so how can finance companies adapt to meet the increasing demands for reporting? Shawn, what are your views on that one?
Shawn: As a starting point, it's amazing to see the continuing increase in regulatory compliance requirements. I mean, ESG is one like the amount of opportunities or ask of stakeholders around ESG is incredible. In my world, just in tax alone, just recently in the last year, the OECD global minimum tax, all kinds of things that they're going to have to start reporting, it's incredible. So as you look to address these various regulations, it's actually really important to take a risk based approach. And I think France-Anne talked about the regulatory frameworks you may have and because not all regulations have to be dealt with at the same level. So, for instance, France-Anne I know with working with you in financial services like Anti-Money Laundering, that's a that's a license to do business. So we have to companies have to ensure it's theirs. But others, maybe you could look at it and maybe the risk isn't as high if you're offside, right or if you have an offside or something. So it's really important to do a risk assessment and stratify each requirement around that.
France-Anne: Yeah, I agree with Shawn. Not all rules and regulations are created equal in doing a risk based approach, formalizing that who's doing what, who's playing which role, why are you doing it. And making sure that if you're not implementing necessarily everything that you've identified, that you have a risk acceptance process that's cleared and that everybody understands that this is a choice that you've made from a business perspective. So we see more and more companies revisiting their program in the reporting framework to really think through what are we trying to achieve? What is the overall goal of the reporting that we put in place? And then how could we make sure that the process to create that reporting is a streamlined as it can be?
Adam: Yeah, I think that would click with a lot of organizations that that practical approach that the sort of bang for the buck in terms of what you're tackling as you as you try and manage these various risks. And in a world where there are not unlimited resources, I think we all know that. So, you know, contrast that with increasing regulatory obligations. And you really have this recipe where the finance function is having to deal with a lot right now. So against that challenging backdrop, how can finance leaders set up their systems to be agile enough to handle all that change?
France-Anne: I think the important thing is really to, as I mentioned before, I understand why you're doing certain things and understand what is the risk to your business so that you can really focus on the ones that have the most impact and measure, you know, how could you potentially change the way things are done to comply, but in line with your risk appetite. So not over compliance, which is something that we've all learned through time that when a new regulation comes into play because there's so little information and there's so little experience, you have a tendency to overshoot and then kind of step back after like a pendulum. So I think making sure that that discussion and that conversation is happening at your management team is really important to right size the response plan. Also making sure that whatever you decide and however you implement it, it's robust enough to be able to adapt to changing regulations and environment, like Shawn mentioned. There's so many regulations that are coming out that your process has to be super flexible to be able to add new regulations as they come up, but again, do a risk based approach. Don't try to have every single thing covered in the same level of detail.
Adam: Yeah, that makes a lot of sense, France-Anne. You know, one of the ways companies are trying to tackle this in a more efficient way is to look at automation in the compliance process. Do you have any views on that?
France-Anne: Of course. So when we look at the automation, the tools that are and technology is available now allows you to do a lot more than we were able to do in the past, allows us to take a piecemeal approach, identify those some more significant risks and be able to cover those off in a different manner. So I think the opportunity to streamline those processes are definitely greater now with the technology that's available to companies at a much lower cost than it used to be as well.
Shawn: Yeah, I would just add there, France-Anne. It's not a one and done situation. It's an evolution. As new technologies come on, look at just because you've been doing something for 10 years to address a certain regulation, maybe even just have a smaller project to look at that is there a better way to actually accomplish what you're trying to do to alleviate the risk.
Adam: Let's shift over to people and the role that people play in the compliance journey. In one of our previous podcasts around broader finance transformation, we really got into how people and talent shortages are affecting the finance function and certainly the compliance area as well. So what can leaders do to sort of tackle this more with less problem? And how can they establish their compliance priorities for their people?
Shawn: Maybe all divided into two things. One is just about how we comply with regulation. And then secondly on the impact of people as we ask them and they'll get France-Anne to add in here as well. But the first one is really having ensuring there's clear division of responsibilities and accountability for risk. So I think that's really critical and make sure we're not duplicating efforts to achieve the same thing. Is there other stakeholders that could by working with them, we could achieve by signing off the compliance? The other one is we've heard that workloads are increasing to comply with regulations. So I think you just set it around. The upskilling or automation is really, really important on that. So really hearing from your teams, the people that are actually doing the work is a better way. And a lot of times what we're seeing in organizations, they know the people are doing the work and know a better way to actually get it done. The second issue is around just the whole people experience. I mean, as these regulations are increasing and more information is demanded, think there's a tendency to really push it down to the first line of defense. And employees are getting burnout because they have to comply with so many things and asked to do things outside of just getting that function done. And France-Anne I think you're closer to that first line of defense and what are you seeing with your clients?
France-Anne: I'm seeing a lot more conversations about how the people are receiving it. So they are building in the user experience and saying, how can we make it easier for people to comply? How can we make sure that we are as efficient as we can as an organization to achieve our objective but not overburden our people? So I think we're spending a lot more time making sure that we're not just adding new tasks all the time. But we're really thinking through does this make sense and can we make it more efficient by potentially having one control that covers multiple risks or covers multiple compliance obligations. And that way, people actually are able to observe that we're trying to make it easier for them. So I think overall that would increase engagement surveys and the experience employees are having on their day to day jobs.
Adam: Those are fantastic examples, and you know, my observation is there's no better time to rethink the kind of things that that both of you were just talking about than when an organization is embracing a broader transformation. So, you know, if we're blowing up processes and finance or implementing some new technology, definitely seize the opportunity to make it more than just a technical upgrade. Think about the broader business processes, think about the compliance around it and, you know, think about where we're sort of have two or three controls to tackle the problem right now. Could it be one smart one where some automation around it? Those are some, some real wins that can be part of a transformation program. So we are getting to the end of our podcast here, and it would be great if each of you could share with our listeners the top few areas that companies should focus on when responding to compliance risk challenges overall. Let's start with your perspective, France-Anne.
France-Anne: I think we talked about that lack of talent and managing the experience, I think is a new twist to doing those finance transformations. I would personally see that in the past it was done from either a technology perspective. We needed to change because the system is no longer supported or it was there's technical issues with it or was it costly. And I think what we're seeing now, there's more and more companies that are looking at it as an experience place and wanting to make sure that it's a great experience for their employees. And that is definitely a great opportunity to rethink the compliance needs and make sure that you're doing the right things for your brand and your reputation. To me, the call to actions for finance leaders is as you're going through this exercise, think about the other elements in financial reporting that you could begin to facilitate things for your folks.
Shawn: And mine are very similar too. Like firstly, I'd encourage everyone to take a more holistic and a proactive view for compliance rather than just the reactive approach. So really are other systems that there are other areas of the of the organization that can just be tweaked a bit to actually address the new regulatory requirements. And so if you're looking at a cross function, which provides a clearer and more robust perspective on risk throughout your business. And secondly, I know you've already said this France-Anne, but I will say it too, is really using technology to proactively identify high impact. There is a risk enabling risk owners to create solutions that would prevent a breach. That's really important.
Adam: OK, that's awesome. And this has been excellent, Shawn and France-Anne. Thanks very much. And I have to share some personal examples of working with Shawn and France-Anne in their teams. And, you know, the sheer joy in organizations that we work with when they can really find ways to embed this automation and the time that it frees up for the whole function to just really focus on areas deeper analysis, adding value to the business. It's really elevating that the role of finance and compliance, as is part of our mantra at PwC and really where we try and help companies aspire to. So if you like what you heard today, we also have our 2022 Global Risk Survey Findings report coming out. It's expected to launch in May. And the report aims to identify the top risks in various industries, the challenges faced by risk executives and the actions they're taking to better manage those risks. So please stay tuned for the next compliance transformed audio blog, where Shawn and other PwC leaders will go deeper on the topic and continue to discuss survey findings and share insights on what Canadian organizations can do to prepare for the future risk landscape. At PwC Canada, we're a community of solvers and we believe finance has an important role to play in helping organizations succeed. If you'd like to be part of that CFO community, please reach out to me and we can get you involved. I hope you've enjoyed this episode of Finance in 15, and we'd love to hear your thoughts on the series, so please be sure to subscribe, share and leave us a rating or review. I'm Adam Boutros and this is Finance in 15.
