Today across industries, an increasingly complex global regulatory and enforcement agenda has increased the importance of appropriate corporate regulatory behaviors and actions. A growing global focus on consumer privacy and data protection, as well as new environmental laws and legislation, is further demonstrating the importance of compliance in supporting operational and environmental resilience.
Compliance function and leaders now face a new challenge: Dealing with multiple strands of complex change, happening simultaneously across the enterprise, and at warp speed.
Accenture’s latest Compliance Risk Study – 2022 Edition surveyed the sentiments of compliance leaders in the banking; capital markets; energy; health and public services; insurance; life sciences; software and platforms; telecommunications; utilities; and travel and hospitality sectors. Our findings confirm that compliance functions across the globe are feeling the heat of accelerated transformation and the need to respond to an expanding compliance agenda.
According to our Compliance Risk Study, regulators and governments are the groups posing the greatest compliance challenges since 2019 and they are expected to continue to do so through 2023.
The new face of compliance
Compliance functions are rethinking how they deliver enterprise-wide services and be more responsive to rapidly shifting business needs. Our study highlighted several developments, including:
Becoming more proactive:
Compliance functions are maturing, shifting from a reactive and advisory role to become a proactive partner to the business. Our study also reveals that there is an increased commitment to establish a culture of shared compliance responsibility across the enterprise. To that end, nearly half of our respondents plan to upskill their compliance staff to drive a culture of compliance across the enterprise. And about 40% plan to invest in new tech to achieve this goal.
Using advancements in technology and data:
Over half of study respondents say they are using leading technologies to strengthen their compliance function. More than nine in 10 respondents (93%) agree or strongly agree that new technologies such as artificial intelligence, and cloud make compliance easier by automating human tasks, removing human error and making the process more effective and efficient.
Responding to cost pressures:
Our study clearly shows that the cost equation is a growing challenge for the compliance function. In fact, nine in 10 respondents expect evolving business, regulatory, and customer demands to increase both their compliance-related and compliance operating costs by up to 30% over the next two years.
In response, 90% of study respondents have moved compliance resources to lower-cost locations. And 41% say they are already “right-shoring” routine compliance tasks and activities to countries that provide the best efficiency/cost combination.
of Compliance Risk Study respondents have built or are building a culture of compliance to share the responsibility across the enterprise.
of surveyed compliance officers expect to increase investment in their compliance function over the next two years.
of respondents say that artificial intelligence and machine learning technologies will strengthen compliance. Yet, many believe technology can be their greatest source of disruption.
Dealing with the riskiest risks
Of the top compliance risk areas we identified, three stand out among compliance executives: cybersecurity, ESG and privacy.
Respondents to our study across all sectors stressed the heightened challenge of managing cybersecurity risks, as the working world has shifted from being fully onsite to a hybrid onsite/offsite environment. Banking, health and public services, insurance, and software and platform respondents cited cybersecurity as one of the top two compliance challenges they face today.
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ESG is also an increasing focus of compliance leaders. The ESG area, perhaps more than any other, requires compliance functions to have continuously relevant, adaptable, and tech-driven regulatory change and related risk management programs.
Our Compliance Risk Study revealed that, over the past two years, data privacy has been the single greatest challenge faced by respondents across all sectors. Looking to 2023, respondents noted that they expect it to remain one of their top compliance challenges.
Banking, health and public services, insurance, and software and platform study respondents cited cybersecurity as one of the top 2 compliance challenges they face today.
Leverage data-driven insights for decision-making
The warp speed at which companies operate requires compliance functions to have accurate and complete visibility into the risks and mitigating controls of the business. Visibility that is often missing today. More than half of our study respondents (52%) note the lack of data and information to properly identify and assess business exposure to third-party risks. Certainly, more work is required here.
Accenture’s Compliance Risk Study – 2022 Edition reveals, now more than ever, the need for leaders across all sectors to rethink compliance in the face of mounting issues and risks, rapid regulatory change, unforeseen crises, and data complexity. Demands placed upon the compliance function by internal and external stakeholders—especially in the areas of cybersecurity, ESG and data privacy—compel compliance leaders and others to create a more responsive and agile compliance function, even as they deal with rising compliance costs and firm-wide cost-cutting pressures.