Why compliance professionals must have strong business acumen

By Carol Mfusi

In 2016, Wells Fargo made headlines for all the wrong reasons as it was embroiled in a scandal where employees created over two million unauthorized accounts from 2002 to meet aggressive sales targets. Compliance structures existed, yet the compliance function operated in a vacuum, disconnected from the business’s goals, commercial incentives, and operational realities that fueled unethical behavior. This resulted in reputational damage, regulatory penalties in the billions of dollars, and a profound erosion of public trust as credit ratings of customers were harmed and personal information was unlawfully misused to wrongfully collect millions of dollars in fees and interest. The lesson is sobering and clear; compliance, devoid of business acumen, is only compliance in the name.

Accordingly, in addition to navigating legislation and regulations, compliance experts must also comprehend the revenue models, economic factors, and strategic priorities that influence corporate behavior. Those who don’t interact with the business context risk being marginalized or, worse, being involved in systematic failures that have detrimental organizational and compliance repercussions. On the other hand, business-savvy compliance specialists function as strategic advisors who can impact corporate culture, anticipate risk and integrate compliance into the framework of organizational decision-making.

What is business acumen?

In “The Business Acumen Handbook: Everything you need to know to succeed in the corporate world”, Steven Haines defines business acumen as the combination of skills, behaviours, and abilities that help an organization reach its financial and strategic objectives. Haines emphasizes that business acumen involves theoretical knowledge and practical application of this understanding to real-world business scenarios. In simple terms, it means seeing the bigger picture, understanding how different parts of the business fit together and making decisions that drive the company’s overall success.

Haines also elaborates that individuals with strong business acumen consistently demonstrate their value through the following primary competencies:

• Strategic problem-solving: Business-savvy leaders use a methodical, analytical approach to problem-solving. To choose the best course of action, these people weigh the benefits and drawbacks of each choice and apply objective reasoning.
• Thorough knowledge of business operations: These executives also have a thorough awareness of how the company runs in all important areas, such as operations, finance, marketing, sales, human resources, IT and supply chain. They are skilled at precisely assessing the company’s current state, understandably expressing business difficulties, and drawing well-informed conclusions even when confronted with conflicting or insufficient information.
• Increased operational efficiency: Leaders with greater business acumen can see problem areas, figure out how to work more efficiently, cut expenses, and make better-informed decisions about resource allocation.
• Better financial management: Leaders with business acumen make more informed financial decisions and improve financial performance by comprehending financial indicators, budgets, and the levers that affect profitability.
• Customer-centric product development: Business-savvy leaders are better equipped to comprehend the needs of their clients and how the organization can provide them with attractive value propositions. They can make choices that enhance user or customer experiences, which increases revenue growth and fosters customer loyalty.

Compliance is not an isolated function in today’s complex and fast-paced business environment, and accordingly, professionals in this field must possess a good degree of business acumen, especially in the context of Governance, Risk, and Compliance (GRC). 

How does business acumen empower compliance professionals to be strategic business contributors? 

In the following five ways, business acumen enables compliance professionals to transcend the job of regulatory enforcers and become strategic advisers who help mitigate risks effectively, shape corporate culture, and guarantee ethical and sustainable business practices:

1. Aligning compliance initiatives with business objectives

For several reasons,  it is crucial to achieve precise alignment between corporate objectives and regulatory requirements. Firstly, it reduces the risk of costly fines, legal liabilities, and reputational damage arising from non-compliance. Secondly, it enhances the organization’s reputation and brand value by building trust among key stakeholders, including investors, customers, and regulatory bodies. Additionally, aligning business objectives with legal and regulatory requirements can unlock new opportunities, such as access to untapped markets and developing innovative products and services.

While the advantages of achieving full alignment are clear, the process is often complex and challenging due to the following key factors: 

• Cross-department coordination: Effective alignment depends on collaboration among various departments, and organizational silos can hinder communication and create inconsistencies in compliance efforts.
• Balancing compliance with business goals: Organizations must navigate the tension between meeting regulatory requirements and pursuing goals such as profitability, innovation, or efficiency. 
• Limited Resources: Alignment often requires investment in technology, skilled personnel, and training. Competing priorities and budget constraints often limit an organization’s capacity to implement and sustain these efforts.
• Organizational culture: Fostering a culture that values compliance as a strategic asset takes time. In environments where compliance is seen as a hindrance, resistance from employees or leadership can slow progress.

A compliance professional with strong business acumen can accomplish this alignment because they have a comprehensive understanding of an organization’s regulatory landscape and its strategic objectives, its products and services, target customer base, market dynamics, the financials of business and competitive positioning.

Accordingly, they provide strategic compliance management, which involves the integration of compliance initiatives into the broader business strategy, ensuring that compliance efforts are not merely reactive measures but proactive strategic actions that align with the organization’s goals and objectives. Strategic compliance management empowers compliance professionals to develop robust internal policies and procedures, proactively mitigate compliance risks, enhance operational efficiency, and foster a culture of integrity and accountability.

2. Effective risk assessment and mitigation

One of the foundational pillars of the GRC framework is Risk Management, which entails the identification, evaluation, and mitigation of potential threats that could impede an organization’s ability to achieve its strategic and operational objectives.

A professional with strong business acumen evaluates risks through a commercial lens, uses data to go beyond basic risk identification, quantifies the impact of compliance risks, prioritizes them based on business consequences, and illustrates how compliance efforts support business KPIs such as revenue, brand reputation, or customer retention.

This ability to analyze raw data, identify the story it tells and use that insight to make strategic decisions is increasingly critical in today’s corporate environment because modern organizations operate in real-time as fraud, cybersecurity breaches, regulatory violations, and reputational risks unfold in minutes.

A compliance professional with strong business acumen and data analysis skills would not only flag large or suspicious transactions in the context of AML regulations within a global financial institution but would also use data to identify subtle patterns, such as structuring and layering, that might not be immediately apparent through rule-based systems. By correlating transaction history, customer profile and behaviour, they can assess the likelihood and materiality of each flagged risk in commercial terms. This enables them to prioritize cases with the greatest reputational, financial, or regulatory harm and advise leadership on where to focus investigative resources. Furthermore, their insights can feed into policy revisions, staff training programs, or the implementation of AI-assisted monitoring systems. This demonstrates how business-aligned compliance can proactively support regulatory integrity and organizational resilience.

3. Influencing business stakeholders and the corporate culture

Business acumen is essential for compliance professionals seeking to influence corporate culture effectively. By understanding the organization’s strategic objectives, market dynamics, and performance drivers, such as ROI, customer retention, and competitive positioning, compliance professionals can communicate in a language that resonates with executives, managers, and employees. This ability enhances their credibility and positions compliance not as a regulatory burden but as a strategic enabler of sustainable growth and ethical conduct.

When compliance is aligned with business priorities, it is more likely to be embraced across the organization. Business-savvy compliance professionals can tailor initiatives to support operational goals while reinforcing ethical standards, embedding compliance into the organizational culture. This integration fosters a proactive approach to risk management, strengthens accountability, and promotes long-term value creation. 

One of Europe’s biggest industrial manufacturing firms, Siemens AG, was involved in a significant worldwide corruption scandal in the middle of the 2000s. The scandal exposed the company’s extensive and systematic use of bribes to obtain contracts in several countries. At the time, the largest financial penalty ever imposed for violations of the U.S. FCPA was the Siemens 2008 agreement to pay roughly $1.6 billion in fines and penalties to settle a significant international bribery case and an additional €395 million to German authorities.

In response, the company also completely revamped its compliance approach to restore confidence, align with long-term corporate objectives, and meet regulatory requirements. Peter Solmssen, the General Counsel at the time, played a significant role in this change. Solmssen placed more emphasis on corporate integration than just legal or regulatory compliance. By presenting compliance as a competitive advantage rather than a limitation, he and his team worked directly with business divisions to understand their operational difficulties and strategic priorities.

Thanks to this strategy, Siemens was able to change its culture from one of reactive compliance to one of shared accountability and proactive risk management. Compliance became an integral element of the company’s identity as it was incorporated into leadership training and performance reviews. In addition to preventing further crises, the change enhanced the company’s standing in the marketplace and promoted ethical, long-term growth.

4. Adapting to dynamic environments

Compliance can no longer be regarded as a static function in an era characterized by rapid technological advancement and concurrent regulatory evolution. Instead, it must continuously adapt to emerging business models, such as those driven by artificial intelligence, and to emerging risk categories, including cybersecurity and ESG concerns. Business acumen is an essential competency for compliance professionals as it enables them to anticipate how changes in market conditions or operational strategies may impact the organization’s compliance obligations. 

Additionally, it empowers them to develop resilient and future-ready compliance frameworks and effectively advocate for investments in advanced compliance technologies, such as automated monitoring systems, by articulating a compelling and commercially sound justification. J.P. Morgan’s use of AI-powered large language models for payment validation and fraud prevention is a prime example of how commercial acumen enables compliance experts to promote cutting-edge technology investments. Since 2021, the bank has leveraged these tools to enhance payment screening processes by reducing false positives, improving queue management, and lowering fraud rates. This technological investment has improved operational efficiency and enhanced customer experience, with 2021-2023 account validation rejection rates dropping by 15-20%.

These developments are more than just technical improvements; they are the kind of calculated, financially sound investments that compliance professionals with strong business understanding are well-positioned to champion. Leaders in regulatory compliance and business performance can create strong arguments for automation and data-driven monitoring tools by acknowledging the dual benefits of these technologies. By facilitating real-time risk detection, these solutions improve compliance frameworks and support corporate objectives, including fraud prevention, operational efficiency, and customer satisfaction.

5. Enabling ethical innovation

A business-savvy compliance professional understands that compliance and innovation are not mutually exclusive and that ethical innovation can be a competitive advantage because developing legally compliant and socially responsible products and services can serve as a powerful differentiator in the marketplace. 

A compliance professional with a strong understanding of business operations and industry dynamics is well-positioned to facilitate innovation within highly regulated sectors such as financial services and healthcare because they can translate legal obligations into actionable insights and design controls that do not hinder innovation but instead support sustainable growth, stakeholder trust, and long-term value creation. This individual can also proactively engage with research and development teams, product designers, and engineers to ensure that regulatory and ethical considerations are integrated into the product development lifecycle from the earliest stages, thereby reducing the risk of regulatory breaches, reputational damage, and costly post-launch compliance remediation efforts.

In the context of a fintech firm adopting ethical AI practices in its mobile credit applications, a compliance professional with strong business acumen would support the launch by aligning regulatory requirements with strategic customer experience goals. They would be able to proactively identify risks in AI-driven loan approvals and data usage and then recommend transparent, user-friendly features like explainable algorithms and consent-based profiling. Additionally, they would effectively collaborate with the product design, customer experience and marketing stakeholders to embed compliance into the customer journey. This approach builds trust, ensures regulatory alignment, and drives higher app adoption, resulting in compliance becoming a catalyst for innovation and customer loyalty.

Conclusion

The Wells Fargo scandal warned that a compliance function cannot afford to be reactive or isolated in a world where ethical behavior is closely linked to competitive advantage, stakeholder trust, and long-term value creation. It needs to be integrated, proactive, and commercially savvy.

As previously stated, a compliance professional’s responsibilities have grown beyond merely interpreting legislation and adopting a tick-box approach to regulatory enforcement. Compliance executives of today need to be business literate to influence strategic choices, negotiate intricate organizational dynamics, and quickly identify new threats. Business acumen is a core competency rather than a supplementary skill. Examples  such as Siemens’s cultural transformation after a bribery scandal or J.P. Morgan’s investment in AI-driven fraud prevention, demonstrate that companies prosper when compliance is integrated into the very fabric of daily operations.

Compliance professionals who develop strong business acumen are better positioned to uphold regulatory integrity and so to help shape resilient, forward-looking organizations. Ultimately, those professionals who understand both the rules and the business will define the future of compliance, not as a cost of doing business but as a catalyst for doing business right.

Are you a compliance or GRC professional looking to connect with another business-oriented compliance professional? Our community is the best place to connect and network with professionals deeply rooted in the field and ready to share their wealth of experience. Why not take the chance to join the Compliance Tribe today?

Abbreviations

AG – German word Aktiengesellschaft, which translates to ‘stock corporation’ or ‘shares corporation’ in English.

AI – Artificial intelligence.

AML – Anti-money laundering.  

ESG – Environmental, Social, and Governance.

GRC – Governance, Risk and Compliance.

IT – Information Technology.

KPI – Key Performance Indicator.

ROI – Return On Investment.

U.S FCPA – United States Foreign Corrupt Practices Act.