Effective compliance management is not just a regulatory obligation but a strategic imperative. The recent 2023 Global compliance risk benchmarking survey conducted by White & Case LLP and KPMG LLP highlights critical trends and challenges in compliance, particularly concerning third-party risk management.
Based on the insights from 201 senior decision-makers across more than 30 countries, the survey provides valuable perspectives on compliance practices globally and the strategies organisations use to address compliance risks.
These strategies encompass various areas, including anti-corruption risk assessments, management of third-party relationships, employee awareness of risks, as well as environmental, social, and governance (ESG) practices, and cybersecurity measures.
Key insights from the survey
- Third-party risks as a major concern: The survey reveals that 59% of respondents view the use of third parties as the greatest anti-corruption risk. This highlights the necessity for robust due diligence processes to mitigate risks associated with third-party relationships, especially in sectors like pharmaceuticals and technology.
- Pressure on compliance teams: Notably, 11% of compliance teams reported feeling pressured to approve third parties despite unacceptable risk profiles. This underscores the importance of maintaining integrity and transparency in compliance practices.
- Regular risk assessments are essential: A staggering 79% of companies conduct documented anti-corruption risk assessments, with almost half performing these assessments annually. Regular assessments not only help in identifying potential risks but also foster a culture of compliance within organisations.
The role of data analytics
The use of data analytics in compliance programs is gaining traction. Implementing advanced data analytics can enhance the effectiveness of compliance programs by enabling real-time monitoring and reporting.
When it comes to adoption, approximately 45% of organisations are still in the developmental stage of using data analytics, characterised by a mix of scalable and manual processes. Notably, about 24% employ rudimentary, non-scaling manual processes, and only 9% of organisations have advanced systems that integrate monitoring, reporting, and automation.
Cybersecurity: A rising priority
As organisations face increasing digital threats, cybersecurity has emerged as the top compliance priority for the upcoming year. Companies must proactively address these risks to safeguard sensitive data and maintain trust with stakeholders.
Despite the emphasis on cybersecurity, many organisations still face challenges in effectively implementing comprehensive cybersecurity measures. This includes integrating cybersecurity protocols into existing compliance frameworks.
Organisations are recognising that effective compliance requires a holistic approach that includes robust cybersecurity measures.
Increased focus on ESG
ESG has increasingly become a focal point for organisations, reflecting a heightened awareness of its significance in compliance and risk management. However, there is a notable inconsistency in how organisations approach ESG risks.
Approximately 38% of respondents indicated that their organisations do not have a clear definition of ESG, which can create confusion and hinder the effective implementation of related policies.
The survey emphasises the need for clearer guidance and communication regarding ESG practices. Successful integration of ESG into broader business operations is essential, and organisations must ensure that ESG considerations are embedded within their overall compliance frameworks to effectively mitigate risks.
Conclusion
The findings from the 2023 Global compliance risk benchmarking survey emphasise that organisations must adopt a proactive approach to compliance, particularly in third-party risk management. By leveraging data analytics, clarifying the approach to ESG risk and prioritising cybersecurity, companies can navigate the complexities of compliance and foster a culture of integrity.
For organisations looking to enhance their compliance frameworks, investing in comprehensive due diligence solutions is essential. Explore our offerings to ensure your compliance program meets the evolving challenges of today’s regulatory landscape.
Read the full survey by White & Case here.