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Compliance: the state of the industry in 2016

Tue, 29 Nov 2016 10:01

Compliance is one of the most fast-moving divisions in the corporate world. The rapidly-evolving demands on our function is driven by a whirlwind of ever-changing technology, risks and regulations. So where do we find ourselves in 2016? And what are the biggest challenges facing compliance professionals?

PwC recently released their State of Compliance Study 2016. Let's explore their findings and see what we can learn from their global survey of 800 executives – including chief compliance officers, chief ethics and compliance officers (CECO), chief legal officers, general counsels and chief audit executives.

The report focuses on business strategy, and how well this is aligned with compliance management. Compliance success starts with the board, and how well senior leaders set the tone and focus attention on ethics and compliance.

Compliance is key, but not always prioritised

The report suggests that this, in general, is happening; 98% of respondents have senior leaders who are committed to ethics and compliance. But this commitment does not always translate into hands-on ownership: 55% claim that senior leaders provide only ad hoc oversight – or delegate many of their compliance and ethics oversight activities.

How to strengthen the 'tone at the top'

PwC recommend a range of measures for clarifying the tone at the top, including regular communications about the importance of ethical and compliant behaviour, recognition of employees who embody these virtues, and disciplinary action against ethics and compliance violations. They also recommend that organisations aim for a 95% completion rate for compliance and ethics training within three months of deployment.

The report finds that compliance and ethics teams are aligning with other assurance functions, but greater coordination can be achieved: 54% conduct compliance and ethics-specific risk assessment activities beyond traditional risk management efforts. Organisations might be missing out on insights from people on the ground: only 21% use employee surveys to gather information on risk assessments.

The strain of regulation

While organisations recognise the importance of compliance, many CEOs view these demands as a burden. In PwC's 19th Annual Global CEO Survey, 79% of CEOs cite over-regulation as a threat to their growth prospects. Could this frustration with regulation make life harder for compliance professionals? It could explain why so few compliance divisions (36%) claim to be 'inherently integrated' in their organisations' strategic planning.

Perhaps the biggest challenge facing compliance and ethics professionals is the puzzle of how to get greater participation from the C-suite, and to encourage them to set the 'tone at the top' – when those same professionals are growing to resent what they perceive as 'over-regulation'.

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