Amid increasing regulatory activity and complexity, investment in the right technology is essential for any compliance team.
Follow the critical path to innovation
Compliance plays a crucial role in a company’s ability to anticipate and mitigate emerging technology risks. Our new report explains how to meet the moment.
For a business team that has traditionally spent little time in the spotlight, the ethics and compliance function has been firmly center stage over the past two years against a backdrop of increasing risk and regulatory activity.
And that spotlight is only getting more intense amid new (or looming) regulatory actions and beefed-up enforcement of existing measures. Indeed, three-quarters of compliance leaders expect even more pressure ahead, as we reported in a recent KPMG survey of chief ethics and compliance officers (CCOs).
Beyond the sheer volume of activity and the tenacity of enforcement efforts, though, another factor is at work: an increase in the complexity of the issues a compliance team must track—and especially around technology.
With companies relying more and more each year on advanced and increasingly interconnected digital, data, and technology capabilities, compliance teams sometimes feel like they are playing a losing game of catch-up. And that was before emerging technologies like generative AI added exotic new risks to the ethics and compliance to-do list.
At the same time, more sophisticated data and technology approaches are exactly what many compliance teams need to navigate the cascading risks. Successful companies meet this new era of seemingly permanent regulatory churn head-on, as we detail in a new report, Implementing tech and data-driven compliance.
To flip the script, CCOs and their teams must build the case for increased investment and innovation. Enhanced data, enterprise-level compliance systems, automation, AI, and upskilling staff all need to be addressed. As detailed in our new report, here are three steps to make that happen:
As a starting point, new technology initiatives need to be aligned with the organization’s biggest compliance pain points, both current and emerging. Industry-specific challenges range from new regulations to tighter monitoring of third-party risks.
59%
Cybersecurity/data privacy
50%
Enhanced data and analytics
48%
Process automation
35%
AI/models
Top actions items for CCO
A big part of the challenge on aligning technology with evolving compliance risks is that the whole exercise can feel like trying to hit a moving target. Aim for these marks:
Automation can free up staff bandwidth and is an essential companion for the advanced data, analytics, and technology systems. But automation on its own is not some magic wand. Compliance teams must prioritize the process automations that deliver the most impact and value by testing use cases. Measure the related uplift, then fully deploy accordingly.
45%
Mapping and updating the overall regulatory and risk matrices
42%
Manual supervisory tasks, such as employee training or policy reviews
41%
Regulatory change management
Top actions items for CCO
To integrate automation into compliance and increase organizational awareness of the compliance framework, CCOs need to prioritize:
As the volume and complexity of risks grow, the ethics and compliance team can no longer be viewed as a “cost center.” Compliance is a critical investment for the entire organization that can deliver measurable returns and help the whole enterprise operate more efficiently. And CCOs and their teams need to make that case to company leadership.
52%
Promoting compliance culture as an enterprise-wide strategy
51%
Increasing the use of technology and/or AI
48%
Improving digital trust and safety
46%
Encouraging business unit accountability
Top actions items for CCOs
CCOs will benefit from viewing compliance investments as portfolios that are continually measured and optimized. To do that, compliance teams need to:
Implementing tech and data-driven compliance
Learn much more about each step and the increasing importance of advanced technology, data, and analytics in the ethics and compliance function.
Download PDF2023 KPMG Chief Ethics & Compliance Officer Survey
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