According to the new Accenture 2014 Compliance Risk Study report, compliance risk management has reached a critical juncture in its evolution toward becoming a control function that is relevant and has long-term stature and respect within financial services organizations.
The study, a survey of compliance officers at 100 banking and capital markets firms across Europe and North America, reveals five key themes, characterizing the nature of changes to compliance programs, the level of investment in compliance, the difficulties in securing compliance talent and demonstrating program effectiveness, and future priorities for compliance programs.
Firms that are proactive in setting their investment priorities, considering innovative solutions, reviewing their talent agenda and evaluating their performance may be able to establish a competitive advantage.
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New research from Accenture confirms that compliance risk management in the banking and capital markets sectors has grown in size and stature in the wake of recent industry events. The key concern now is whether such growing importance has achieved the required shift in behaviors and whether compliance programs can sustain the investment required to maintain their seat at the table and become a true strategic business partner.
Accenture’s 2014 Compliance Risk Study—based on responses from compliance officers at 100 banking and capital markets firms across Europe and North America—indicates that compliance risk management is at a critical juncture in its evolution toward becoming a control function that is relevant and can establish long-term stature and respect within financial service organizations.
Five key themes emerged from the study:
The size and shape of compliance programs continue to evolve. Compliance has made significant progress in its stature and role within the organization. A majority of compliance programs now report directly to the board or the chief executive officer (CEO), but there remain challenges in driving influence.
Further investment in compliance is needed to achieve strategic goals. Investment in compliance shows no sign of slowing, with firms in Europe and North America both viewing analytics and risk modeling as a method for helping predict and mitigate future compliance events.
The competition for talent has become a barrier to success. Securing sufficient compliance talent will be key to addressing sources of financial and reputational damage to an organization. Firms need to rethink identification, recruitment and retention of talent.
With a “perfect storm” brewing in compliance, firms need to demonstrate effectiveness and think beyond traditional solutions. As they confront both a need to invest and a scarcity of talent, firms must rethink their growth plan to ensure long-term sustainability, maximize human capital and demonstrate their success.
The horizon is continually moving and compliance programs are setting priorities for the future. Proactive, strategic planning by compliance programs will be critical for building and maintaining competitive advantage. In addition, programs need to adopt a global mindset that reflects local priorities as they plan for the skills and technology required to sustain their development.
The size and shape of compliance programs continue to evolve
Thirty-one percent of respondents state their compliance programs report to the Board, with another 40 percent reporting to the CEO.
The competition for talent has become a barrier to success
Thirty-four percent are looking for compliance talent to hire and 46 percent are planning to expand their compliance teams.
Further investment is needed to achieve strategic goals
Sixty-five percent of banking and capital markets firms expect to increase their investment in compliance risk management at a rate of 10 percent or more over the next two years.
Accenture’s 2014 Compliance Study was based on interviews with compliance officers at 100 banking and capital markets firms across Europe and North America
As the survey data indicates, compliance programs within banking and capital markets firms are at a key inflection point in their development. Their role and stature have increased, but with this comes greater scrutiny to evidence their value to the business, their success to the regulators and their ability to achieve results in an efficient manner.
As the size and shape of compliance programs continue to evolve, there may be further headwinds as firms have to address concerns about their culture, behavior and operations, while also positioning themselves to handle the ever-changing requirements of compliance risk management and the size of investment required to meet them.
How firms respond to this challenge will be critical in whether they maintain their seat at the table and become a true strategic business partner. Firms that are proactive in setting their investment priorities, considering innovative solutions, reviewing their talent agenda and evaluating their performance may be able to establish a competitive advantage.
Samantha Regan is a managing director in Accenture’s Finance and Risk business service. She has 17 years of global experience in banking and capital markets gained within industry and consulting. Samantha specializes in regulation and compliance and has been deeply involved in developing Accenture’s regulatory and compliance management capabilities. She is the global regulatory and compliance lead for Accenture’s Finance and Risk Services practice.
Ben Shorten is a manager in Accenture’s Strategy practice, based in New York City. He has more than six years of experience partnering with Tier I investment banks and leading retail banking institutions in both the United Kingdom and the United States. Ben specializes in strategy definition and operating model design in response to government and regulatory mandate to change.