- What is a compliance driver?
A compliance driver refers to directives or policies that push for efforts that ensure organizations adhere to government legislation and other regulations per industry. It may include direct drivers such as intrusive supervision, thoroughness in management or financial sector complexity, and indirect drivers like media scrutiny or the ever-growing customer awareness.
- Define and explain the role of the CCO.
A Chief Compliance Officer refers to the individual in an organization tasked with ensuring everyone conforms with regulation requirements put in place by external bodies and compliance by employees for internally set protocols through oversight and management. Their tasks include formulation and implementation of proper regulations, ensuring everyone adheres, investigating any violations of appropriate procedures, and reporting to the Chief Executive Officer (or the board running the organization).
- What is the difference between a rules-based approach and principle-based regulation? Provide one example for each.
Rules-based regulation pertains to specific guidelines on how everyone in each capacity should behave. Examples include a particular speed limit on a highway, say, 100km/hour, meaning anything beyond that is breaking of the law. Another instance consists of the use of specific coding in technology to ensure zero loopholes. The efficiency of that system depends on an airtight set of rules, hence the need for rules-based regulation. Principle-based regulation includes a general regulation approach that poses flexible control and procedures on expectations leaving organizations to set their thresholds. An example is instituting a speed limit sign that decrees that drivers maintain low speeds without mentioning a specific number. Another would be the natural way laws state that one may be jailed for up to twenty years or fined a particular sum. It leaves it to the judge to determine the sentence on deciding the number of years.
- What are the two disadvantages and two advantages (four total) of rules-based and principle-based regulation?
Principle-based regulations have the advantage of creating a more innovative industry and also protects industrial managers in their need to ensure compliance while sticking to company principles. Disadvantages arise because of the ambiguity of principles interpretation; an organization may get sued occasionally for flouting laws. Also, the uncertainty may influence negative power plays, such as abuse of power. For rule-based approaches, disadvantages include their rigidity since it does not foster innovation in the industry. Also, having specific rules may not cover upcoming trends leaving loopholes that may be exploited by organizations. Advantages include specificity, which means that compliance is easily verifiable. Also, their specific nature means it is a simple model that concisely explains the expected protocol.