PwC recently released its fifth annual State of Compliance survey, providing benchmarking data for compliance officers working in businesses of all sizes. This year’s report focuses on current challenges CCOs face and how those CCOs can play a greater strategic role in companies.
The report begins by highlighting a surprising inconsistency in the business world: while 78% of CEOs view increasing regulation as the top threat to growth, only 35% of CCOs are involved in strategic planning. CCOs, as the report emphasizes, are well-equipped to provide business strategy insights when it comes to regulatory risk management.
Another interesting finding: respondents put data security at the top of the list of risks for the coming five years. This was followed by privacy and confidentiality, industry regulations, corruption risks and fifth on the list: supplier/vendor/third party compliance risks. Last year, supplier risks didn’t make the top 10 and corruption risks were also not nearly as prominent. Data security was added to this year’s survey due to the rise in cyber theft incidents.
With 56% of CEOs responding that their companies are likely to compete in new industries over the next three years, CCOs will have a large role to play in ensuring that compliance risks don’t eliminate the potential gains of expansion. As Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA Unit said regarding Smith & Wesson’s FCPA settlement, “This is a wake-up call for small and medium-size businesses that want to enter into high-risk markets and expand their international sales. When a company makes the strategic decision to sell its products overseas, it must ensure that the right internal controls are in place and operating.”
The survey discussed other important concerns as well. Different organizations have different compliance functions due to their industry, size or culture. Agreeing on what is managed and who manages it is a necessary task for achieving a more mature compliance program.
Collaboration is important too. Many compliance functions are housed within the legal department which allows for better management of legal risks, but leaves out important talent from IT, procurement, or finance backgrounds. While housing compliance within legal may take advantage of attorney-client privilege, it may also sacrifice the ability to identify and manage risks outside legal frameworks.
The survey also lays out opportunities and the advantages of CCOs developing compliance programs in a way that integrates compliance into the greater strategic planning of the business. Read the full report here.