Compliance Skills Series: Emotional Intelligence – A Key Driver in Compliance and Risk Management

By Lefki Angeli | EQ Practitioner at Partners PS

In today’s intricate and dynamic world of finance, Emotional Intelligence (EQ) has emerged as a critical competency for compliance and risk management professionals.

As these roles increasingly demand not only technical expertise but also interpersonal skills, understanding and leveraging EQ can significantly enhance the effectiveness of compliance and risk management programmes, safeguarding the success of the organisation and all who work there.

 Understanding Emotional Intelligence

EQ refers to the ability to recognize, understand, manage, and influence emotions in oneself and in others. Daniel Goleman, a pioneer in the field of EQ, breaks EQ down into four key competencies:

• Self-Awareness, which entails recognizing and understanding emotions as they happen.
• Self-Regulation, which requires managing emotional responses, remaining adaptable and being able to exercise optimism.
• Social Awareness and Empathy, which enable the understanding of other people, their positions, perspectives, and feelings.
• Relationship Management, which safeguards relationships and enables the movement of people in desired directions.

Goleman’s model introduced in his seminal book, Emotional Intelligence: Why It Can Matter More Than IQ, has been widely influential in emphasizing how critical these competencies are both for building personal resilience and well-being and ensuring professional success.

Today, after almost three decades of research into the competencies that make up EQ, it is without doubt that developing these skills can significantly impact effectiveness, well-being, quality of life and success. This is true across industries, sectors and levels, but is especially impactful in high pressure fields and positions requiring strong interpersonal interactions and ethical decision-making, as is the case with roles in compliance and risk management.

How Emotional Intelligence Can Assist in Compliance and Risk Management

EQ is instrumental in the success of compliance and risk management and can make a significant impact in ways explained below.

Enhancing Communication

Effective compliance relies heavily on clear, concise, and persuasive communication. EQ enables professionals to:

• Understand and address concerns: By empathizing with colleagues, clients, and regulators, compliance officers can better address concerns and foster a cooperative environment.
• Defuse conflicts: High EQ helps in recognizing emotional triggers and resolving conflicts amicably, maintaining professional relationships and team cohesion.
• Persuade and influence: Strong social skills and self-regulation allow compliance professionals to advocate for policies and procedures more persuasively, ensuring better adherence and cooperation across the organisation.

Building Trust and Credibility

Trust is foundational in compliance roles. EQ contributes to:

• Consistent integrity: Self-awareness and self-regulation ensure that compliance officers act consistently with integrity, building trust with stakeholders.
• Empathetic leadership: By demonstrating empathy, leaders can connect with their teams, fostering an environment where ethical behaviour is valued, and compliance is seen as a shared responsibility.

Improving Decision-Making

Emotional intelligence enhances the ability to:

• Navigate uncertainty: Self-regulation helps professionals remain calm and composed in high-pressure situations, facilitating clear-headed risk assessment and decision-making.
• Identify emotional biases: Self-awareness aids in recognizing personal biases that might cloud judgment, ensuring more objective, balanced risk evaluations and better critical thinking.
• Foster ethical decision-making: Empathy and motivation contribute to making decisions that not only comply with regulations but also align with the organisation’s ethical standards.

Managing Stress and Preventing Burnout

Compliance and risk management roles often involve high-stress environments due to tight deadlines, regulatory scrutiny, and the potential consequences of non-compliance. EQ helps in:

• Stress reduction techniques: Utilizing stress management strategies such as mindfulness and emotional regulation to maintain mental well-being.
• Work-life balance: High self-awareness aids in recognizing the need for work-life balance, preventing burnout and promoting sustained productivity.
• Supportive work environment: Empathy and social skills contribute to creating a supportive environment where team members feel valued and understood, reducing stress levels collectively.

Facilitating Change Management

Compliance and risk management often require adapting to new regulations and organisational changes. EQ aids in:

• Adaptability: High emotional intelligence improves adaptability, helping professionals navigate and embrace change effectively.
• Communication during change: Empathy and social skills enable effective communication during times of change, addressing concerns and maintaining morale.
• Resilience building: Self-regulation and motivation foster resilience, enabling professionals to recover quickly from setbacks and continue to drive compliance efforts.

Enhancing Ethical Awareness and Behaviour

Ethical behaviour is crucial in compliance and risk management. EQ fosters:

• Ethical sensitivity: Empathy enhances the ability to understand the ethical implications of decisions and actions, promoting a culture of integrity.
• Conflict of interest management: Self-awareness helps professionals recognise and address potential conflicts of interest, ensuring unbiased decision-making.
• Promoting accountability: Social skills and self-regulation encourage a culture of accountability, where individuals take responsibility for their actions and decisions.

Driving Collaboration and Team Dynamics

A compliance and risk management team with high EQ can significantly influence the broader organisational culture by:

• Promoting ethical behaviour: When leaders demonstrate high EQ, they set a standard for ethical behaviour that encourages compliance and emotional intelligence throughout the organisation.
• Enhancing employee engagement: Employees are more likely to be engaged and motivated in a workplace where their emotions and well-being are acknowledged and valued.
• Fostering innovation: A supportive and emotionally intelligent environment encourages creative problem-solving and innovation, which are crucial in the ever-evolving landscape of compliance and risk management.
• Driving collaboration and team dynamics: High EQ fosters open communication, trust, and mutual respect among team members, leading to enhanced collaboration and synergy. This collaborative environment enables more effective risk identification, mitigation, and compliance efforts, as team members leverage diverse perspectives and expertise to address complex challenges.

So, EQ is not just a soft skill; it is a critical competency for compliance and risk management. By enhancing their EQ, compliance and risk management professionals can improve communication, build trust, make better decisions, foster a positive organisational culture, maintain their resilience and protect their well-being. 

As the financial landscape continues to evolve, the ability to navigate emotional complexities will become increasingly valuable, making EQ an essential tool in the compliance and risk management toolkit. Luckily, EQ skills are learnable and subject to improvement with time and practice. The more we put into developing our own EQ skills as well as creating conditions of the promotion of EQ teams, the more we will reap the benefits of our efforts.

Practical Exercises to Enhance Emotional Intelligence

Improving EQ is a continuous process that requires intentional practice. Here are some exercises that can help compliance and risk management professionals enhance these critical skills in EQ:

Self-Awareness Exercises

• Improve emotional literacy: Enhance your understanding and identification of emotions by expanding your emotional vocabulary. Practice naming and describing your feelings, particularly in high-stress scenarios with greater specificity, which can deepen your self-awareness and emotional insight.
• Journaling: Regularly write about your emotional experiences and reactions, especially after dealing with demanding situations such as compliance breaches or risk-related incidents. This practice can help you recognise patterns and triggers in your emotional responses, improving your ability to handle similar situations in the future.
• Mindfulness meditation: Practice mindfulness to improve your ability to stay present and become more aware of your emotional states. This can be particularly beneficial during audits, investigations, and other high-pressure compliance activities.

Self-Regulation Techniques

• Pause and reflect: When faced with a stressful situation, such as a sudden regulatory change or an emerging risk, take a moment to pause and reflect before reacting. This helps in managing impulsive responses and making more considered decisions.
• Stress management strategies: Engage in activities that reduce stress, such as exercise, deep breathing, or hobbies, to maintain emotional balance.

Empathy Development

• Active listening: Practice active listening by giving full attention to the speaker, asking clarifying questions, and reflecting on what is being said without judgment. This is crucial when engaging with regulators, stakeholders, or team members to understand their concerns and viewpoints fully.
• Perspective-taking: Make a conscious effort to understand situations from others’ viewpoints, such as clients, employees, or regulatory bodies. This can be done through role-playing or empathy maps.

Social Skills Enhancement

• Feedback seeking: Regularly seek feedback from colleagues and mentors to improve your interpersonal interactions. In the context of compliance and risk management, this can help you refine your communication strategies and build stronger relationships with your team and external stakeholders.
• Networking: Build and maintain a network of professional relationships within the compliance and risk management community. Engage in networking events, both within and outside your organization, to exchange best practices, stay informed about industry trends, and collaborate on compliance initiatives.

Additional Resources for Enhancing EQ

For those looking to further develop their emotional intelligence, here are some recommended resources and tools.

Books on EQ

• Emotional Intelligence: Why It Can Matter More Than IQ by Daniel Goleman: This foundational book provides a comprehensive introduction to the concept of EQ.
• Emotional Intelligence 2.0 by Travis Bradberry and Jean Greaves: Provides strategies for increasing your EQ, complete with an online assessment tool.
• Team Emotional Intelligence 2.0 by Jean Greaves and Evan Watkins: Explores how to cultivate emotional intelligence within teams to improve collaboration and performance.

Online Courses and Workshops

• Six Seconds: Provides a variety of courses focused on developing emotional intelligence in personal and professional settings, including certification programs for EQ practitioners.
• LinkedIn Learning: Features video tutorials on various aspects of EQ, including self-awareness, empathy, and social skills.

Tools and Assessments

• Mindfulness Apps: Applications like Headspace and Calm offer guided mindfulness exercises that can enhance self-awareness and self-regulation.
• EQ 2.0 and Team EQ 2.0 Assessments: Assessments designed to measure emotional intelligence at both individual and team levels, providing insights into areas for development.
• How We Feel App: This app tracks your emotions over time, providing insights into patterns and helping you better understand and manage your emotional experiences. It offers exercises and prompts to enhance emotional awareness and regulation.

Professional Networks and Communities

• The Consortium for Research into Emotional Intelligence in Organisations. 
• Emotional Intelligence Network (EIN): A global community for professionals interested in EQ, offering resources, events, and networking opportunities.
• The Daniel Goleman Emotional Intelligence Coaching Certification: For those looking to dive deeper, this certification offers extensive training in EQ.

In conclusion, Daniel Pink, writer and expert on human motivation and development, observed that in a high-IQ job pool, EQ skills like self-regulation, optimism, and empathy, mark those who emerge as outstanding.

This is an interesting observation, so as compliance and risk management professionals, ask yourself: Do you want to be outstanding? If so, which aspect of your EQ will you focus on first to begin your journey?

This article originally appeared on AGRC’s blog, The Compliance Digest, here

https://thecompliancedigest.com/2024/05/28/compliance-skills-series-emotional-intelligence-a-key-driver-in-compliance-and-risk-management/