Evolving risks and new investments in Compliance – KPMG 2021 CCO Survey

Two thirds of Chief Compliance Officers (CCOs) indicate that automation and technology will be integral in their compliance efforts in the next three years, while 70 percent of them say that regulators’ focus on compliance will increase over the same time period, according to the new KPMG 2021 CCO Survey: Sharing client perspectives on compliance imperatives.

“There is clear progress in CCOs’ understanding of the benefits derived from a focus on automation and technology,” said Amy Matsuo, National Leader, Regulatory Insights and Regulatory & Compliance Transformation, KPMG LLP. “The compliance environment is shifting because of COVID-19, the increasingly mobile workforce and the government’s commitment to enhancing the regulatory environment. Compliance officers need to manage the emerging risks associated with these changes and develop dynamic, effective and sustainable compliance programs through the use of automation and technology.”

Increase in compliance budget with a focus on predictive analytics

The survey shows that compliance departments are beginning to receive increasing financial support for their technology efforts, with 49 percent of CCOs expecting their overall ethics and compliance department budget to increase over last year but 75 percent expecting their technology budgets in particular to increase over the next three years. With investments in governance, risk and compliance tools, numerous organizations are looking toward additional investments in machine learning and artificial intelligence.

With the increase in their budget, CCOs identified data analytics as both the greatest opportunity for automation and the greatest priority; data analytics is a critical element in decision-making and enhancing the messaging and readability of internal and external reporting.

“Data analytics can help Compliance to analyze and address issues before becoming consumer complaints or audit findings,” added Matsuo.

Integrating ESG into compliance

CCOs also indicated that compliance departments are focusing more on ESG.

  • Just more than half (51 percent) of respondents indicated that the compliance function participates in ESG strategy planning.

Compliance’s responsibilities include establishing ESG-related policies and procedures, incorporating ESG risks into overall compliance risk assessments and monitoring ESG components of business investments.

“ESG is critical to all compliance programs,” said Matsuo. “Compliance must monitor ESG-related regulatory changes, corporate commitments, and stakeholder protections and impacts.”

Developing new skills and streamlining compliance policies

The new demands on compliance create the need for new employee skill sets. While 54 percent of CCOs identified data analytics as an area where they need to enhance their compliance team’s skill set, 37 percent said they will look to bring in individuals with expertise in IT security, and 30 percent need to enhance skills in regulatory compliance.

Almost all CCOs (95 percent) also indicated that they have simplified or will simplify compliance policies and procedures.

“CCOs recognize the importance of enhancing technology skills, such as data analytics, IT security, and automation, as they look to enhance their compliance programs,” added Matsuo.

Compliance in the new reality

COVID-19 also increased the need to protect third-party risk and information while reaching and monitoring a remote and decentralized workforce. Most CCOs (63 percent) expect their team to split time between on-premise and remote work even after the pandemic is over.

“The shift to a hybrid model calls for more emphasis on fraud and misconduct programs,” said Matsuo. “Organizations need to ensure that ethics and compliance is embedded in their business operating models while risks, including ESG risks, are identified and addressed.”

About the survey

The KPMG 2021 CCO survey compiled responses from 249 CCOs from large global organizations across various industries, including healthcare; life sciences; banking, capital markets and insurance; industrial manufacturing, consumer markets and retail; technology, media and telecommunications; and energy.

To learn more about the results of the KPMG 2021 CCO survey or to arrange an interview with Amy Matsuo, please contact Andreas Marathovouniotis.

Andreas Marathovouniotis

Andreas Marathovouniotis

Associate Director, Corporate Communications, KPMG US

+1 201-307-7608

 

 

Amy S. Matsuo

Amy S. Matsuo

Regulatory and ESG Insights Leader, KPMG US

+1 919-664-7100

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