In a turbulent world where change and disruption are more commonplace than ever before, challenges are abound. How does this impact risk and compliance teams at businesses?
RegTech firm Diligent and Censuswide recently surveyed over 450 risk and compliance professionals in the US to find out what keeps risk and compliance professionals up at night.
Volatility is the watchword right now – and the survey provided this right, with supply chain issues, cyberattacks and market volatility all ranked high among their concerns. Also cited in this area were evolving legislation and social responsibility issues.
Diligent said, “In terms of corporate reputation, what activists, investors, talent and the marketplace think increasingly matters. Today’s companies want to be perceived as secure, socially responsible and successful, according to our survey. But many expressed problems keeping up — and keeping their boards informed.”
The company added that the first challenge here involves an expanding and increasingly complex risk landscape, with cybersecurity, ESG and economics posing growing threats to stakeholder perceptions.
Ranking near the top for reputational risk with information security (40%) and data breaches (37%). One in three – 33% – of survey respondents reported concerns about third party relationships.
In addition, risk and compliance professionals are also worried about perceptions of their businesses as good corporate citizens. Social responsibility, fraud and environmental impact were also raised as key, at 38%, 36% and 35% respectively. Also, roughly 31% of survey respondents expressed concerns about their firm’s lack of DEI strategy.
In other areas, over three quarters of survey respondents said that inflation is affecting their profitability, while 72% of respondents have implemented a hiring freeze in their organization in the last six months, and over two thirds say they are currently considering layoffs to manage costs.
With legislations and regulations evolving, only 40% of respondents said they feel their organisation is ‘very prepared’ for climate-related disclosure. Just under half expressed feeling ‘somewhat prepared’.
Up to 72% of respondents said they feel there will soon be more pressure to act urgently on ESG, while 34% said that one of their organisation’s top compliance risks is regulatory compliance.
When raised, the compliance risks most important to the experts were corruption and/or fraud at 42%, workplace health and safety at 41%, employee behaviour at 38%, quality assurance at 37% and environmental impact at 36%.
Elsewhere in the study, up to 79% of respondents said their organisation has increased spending on risk and compliance in the last two years, while only 7% decreased it. Up to 68% anticipated their organisation to increase spending on such technology over the next two years and only 11% expecting spending in this area to decrease.
Over a third of respondents said they are maintaining clear oversight of global entities and their risk profiles, while the same amount reported using tech to gain a holistic view of risks across the organisation. Meanwhile, 42% said they are unable to connect data from disparate systems, depriving them of a full picture for timely monitoring and informed decision-making.
Nearly 39% of those surveyed reported insufficient time and resources for automating workflows. The same percentage said they were inadequately able to identify failures in their risk monitoring and management systems, and 37% said they didn’t know if their efforts to measure known risks are working as expected.
Data management came in first as survey respondents’ top compliance risk (45%). Just as concerning, over a third (37%) felt challenged to communicate top risks up to the board.
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