Alessandro Addotti – MACOM LUISS Business School Co-Director – Partner at Law Firm Addotti&Associates

The definition of compliance requires a systematic approach with regard to the organizational way. Compliance must be pervasive in every business environment. The “worst case scenario” as source of costs of not-compliance can be a useful guideline about the advantages of compliance.

Compliance consists of rules and applicable laws. However, the definition limits the full organizational commitment which is what compliance means.

It isn’t necessary to tick the box in order to define compliance, since it should be a part of the mission and the values of a company, and a potential source of competitive advantage, not simply a budget item.

The previous inputs define the arena where compliance operates: in particular, in the Italian legislation, L. 231, AML, corporate governance (mainly in regulated sectors) and safety in the workplace are all rules related to compliance. Compliance also means tax or antitrust issues, as well as the standard of business conduct.

Last but not least, the ownership of compliance: it is not enough for a job profile to assure a real best practice in compliance. It should be concrete, operational and measurable.

An organizational chart or a system of delegated powers are good practices, but they are not enough. Compliance efforts should aim at integrated compliance (the role of EHS Officer vs Compliance Officer or the relationship between Legal and Compliance) with KPIs in order to measure its performance.

With this regard, the relationship between compliance and internal audit is essential: a culture of compliance requires the awareness and the knowledge of the main topics and issues above mentioned.

Finally, with regard to the cost of compliance, the most relevant benchmark could be the cost of the not-applied compliance. Although the advantages of compliance are hard to measure, the failure to comply would easily be measured in legal terms.