Just 10 years ago, if the job existed at all, it was a middle-management job, probably reporting into the General Counsel. But today the Chief Compliance Officer (CCO) – and, increasingly, that is the title – is a high-powered position, sometimes reporting directly to the Chief Executive Officer, or if not the CEO, then into the Chief Financial Officer or, especially in banking, the Chief Risk Officer. The CCO role packs clout, influence, and in many organizations when the CCO blows a warning whistle, work stops right there on the project that has caused the CCO to arch an eyebrow.

Where the proliferation of high-level CCOs – and their increase in authority – really took off is probably due to two things. First: the adoption of new, pervasive laws with accompanying regulations such as Sarbanes-Oxley, which penetrates to the very core of what organizations can and cannot do and what records they need to maintain regarding actions taken and not taken. SOX alone, in a very few strokes, introduced radical transparency and accountability to the boardroom.

SOX set the stage with its 2002 passage, and then SEC Commissioner Cynthia A. Glassman gave a September 2002 speech that became the speech heard ‘round the corporate governance world. In her talk titled “Sarbanes-Oxley and the Idea of ‘Good’ Governance,” Glassman explicitly urged organizations to create what amounts to the CCO job.

Glassman proceeded to tick off what she saw as the four key characteristics of the person holding the job:

• “He or she should have sufficient seniority and authority to take the actions necessary under the circumstances.”
• “The position should have the full support of the CEO and senior management, both in theory and in practice. The corporate responsibility officer should have access and provide regular reports to senior management.”
• “…the corporate responsibility officer should have the ability to report directly to the board (for example, to the audit committee chairman).”
• “The responsible officer should have sufficient time and adequate resources to implement the company’s corporate responsibility program in an effective manner.”

Many directors now recognize that the way to get into trouble is to not ask questions, and they also see that the CCO is an important asker of questions that just may matter. The rub against the CCO is that the position rarely adds to the bottomline but, nowadays, more and more directors see that preventing compliance problems before they become front page news is an indirect way to augment an organization’s balance sheet.

That’s why the CCO role is a position with a very bright future, in just about every organization that interfaces with the federal government and that means pretty much everybody. It’s a job whose time truly is now.

This article is available in full at Corporate Compliance Insights.