Best Practice and Delivering Value – The Future for Compliance
The list of KPIs that could appear on a Compliance dashboard is huge and it would not be appropriate to show them all in this document. From our work in this area we have learned a number of lessons relating to the use and effectiveness of Compliance dashboards:
“As a rule, he or she who has the most information
will have the greatest success in life.”
The first lesson is that the most effective dashboards do not concentrate solely on the purely Compliance-related KPIs (such as persistency and NTU rate), but also include some reference to the broader business performance of the organisation, such as sales performance and T&C statistics. This provides management with a much broader view of the organisation’s Compliance performance and allows for more immediate identification of the underlying issues that may be causing the poor Compliance performance in the first instance.
The second lesson is that the dashboard should be devised in such a way that it enables the cross-referral of KPIs and makes for easy identification of correlations. An obvious example might be the possible correlation between the average span of control and the number of sales observations outstanding. However we have seen instances where correlations have been identified between two KPIs that would not at first glance seem connected, but which on investigation, and over time, have proved to be linked and of significance. The dashboard must show the KPIs as trends, and not just as one-off figures. What is of interest to management is the ways in which the KPIs change over time, and not just the absolute figures.
Finally, a feature of Compliance dashboards that we have not yet seen, but which we would like to see and have discussed with clients. Hitherto the dashboards we have seen have all been historical; they report what has happened in the recent past. If dashboards contain the trend and correlation analysis capabilities described above, we see no reason why they should not then become a tool for use in planning the future. By extrapolating trends, and by using as predictive tools the correlations already identified, it should, in our view, be possible to use the dashboard as a tool for scenario planning and impact assessment. This would enable the Compliance Officer to fulfil his role as strategy adviser more effectively; the dashboard would give him the means to say to management “if you do this, that will happen”; he would be able to show the cause-and-effect linkages between the various factors involved in running a regulated firm.