What is the primary role of the Board of Directors regarding compliance?

The primary role of the Board of Directors regarding compliance is to provide oversight and ensure that appropriate compliance mechanisms are in place. This responsibility includes establishing a culture of compliance within the organization, setting the tone at the top, and monitoring compliance programs to ensure they effectively address applicable laws and regulations. The Board is tasked with making certain that the organization has the necessary policies and structures in place to identify, assess, manage, and mitigate compliance risks. By doing so, the Board helps safeguard the organization against legal issues, financial penalties, and reputational damage, thereby promoting long-term sustainability and ethical practices.

While developing new compliance regulations, conducting training, and enforcing penalties are important functions within an organization, these tasks are typically the responsibility of management or specific compliance officers rather than the Board itself. The Board’s main function is to oversee and support these efforts, ensuring that the organization remains compliant with existing regulations and adheres to high ethical standards.