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84% of compliance directors expect increased regulatory pressure in the next 2 years

BUSINESS84% of compliance directors expect increased regulatory pressure in the next 2 years

Continuous changes in regulations and legal requirements are increasing pressure and expectations towards the ethics and compliance departments. Staffing needs are also growing, with 72% of international Chief Compliance Officers (CCOs) declaring an increase in the number of employees in their teams within the next year. Among the priorities is the increase in spending on technology and adapting the organization’s activities to ESG requirements – comes from a KPMG survey conducted among 765 directors of ethics and compliance.

Around 84% of the directors of ethics and compliance who participated in the KPMG survey expect to face regulatory pressure with increasing expectations and controls over the next two years. New legal and regulatory requirements, as well as dynamically evolving trends and expectations towards compliance departments, mean that managers of this area in companies must adjust their plans according to market conditions. The improvement of compliance operations is to be achieved through team development, but also investments in the latest technological solutions, especially those related to data analytics and cybersecurity.

New technologies in the service of compliance

70% of respondents plan to increase the budget for the development of new technologies within the next year. For 36% of CCOs, the priority is to improve cybersecurity, and for 35% to protect personal data. Meanwhile, 30% of those surveyed referred to data analytics and predictive modeling as areas of greatest challenges for the next two years. Compliance directors revealed that priority areas for automation in their companies over the next two years will include risk assessments, monitoring, testing, and regulatory mapping.

Automating processes and analyzing collected data towards building mechanisms to detect potential threats, irregularities, or abuses seem to be a significant step in the development of compliance departments, especially when companies want to follow the latest trends and ESG standards.

The dynamic and changing regulatory environment requires continuous monitoring and adjustment of compliance strategies. This is pushing the directors of compliance departments to constantly develop their function. An example of such changes, for example, is the introduction of the whistleblowers act in Poland, which will require flexible adjustments of compliance strategies. In the context of technological progress, compliance directors remain responsible for effectively using data analytics to monitor risk and manage compliance in areas such as ESG, cybersecurity, and protection of personal data. However, their main role is to shape the organizational culture, promote ethical behavior among employees, and building trust both within and outside the company. Dealing with these challenges requires not only deep knowledge of the regulations but also strategic thinking ability and flexibility in adapting to the dynamically evolving business conditions – says Iwona Sprycha, a Partner in the Deal Advisory Department, head of the HR Advisory & Change Management team and head of the Forensic team at KPMG in Poland.

Keep up with ESG requirements

Only 7% of the surveyed directors of ethics and compliance consider their ESG compliance programs to be fully developed, whereas 41% of respondents admit that these programs are still in the planning or preparation phase in their companies. In many organizations, the process of implementing ESG requirements is at an early stage – getting familiar with the new regulations and considering various business models that meet the standards. At the same time, stakeholders are increasingly holding companies accountable for implementing ESG requirements, making it vital to introduce control mechanisms that will reflect the organization’s impact on the environment and society. The role of compliance directors is to design and implement solid frameworks in line with corporate ESG strategy. It is a basis for monitoring risk in the area of sustainable development and reporting non-financial data.

About the report:

The report “KPMG Global Chief Ethics and Compliance Officer survey” was based on a survey conducted among 765 compliance directors from the largest companies from six industrial sectors: health care and life sciences, banking, capital markets, and insurance; industrial production; commercial markets and retail; technology, media, and telecommunications; energy and natural resources.

The report presents the current situation and a two-year perspective on the complexity of regulations, operational challenges, shaping ethical organizational culture, ESG aspects, and dynamic development of technology in the context of compliance based on the responses provided by the respondents.

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