An overwhelming proportion (89%) of compliance executives with global financial services firms expect their companies to foot a much steeper bill to address compliance issues within the next couple of years, according to global consulting firm Accenture LLP’s fourth annual compliance risk study, published on Monday.
Specifically, almost half (48%) of the compliance executives surveyed who anticipate a spending hike say that the costs could increase by about 10% to 20%, while 18% say the expenses could mount by more than 20% — all within the next two years.
Risks associated with fraud and financial crime, cyberattacks and everyday business were cited as the most challenging — and perhaps most expensive — issues compliance must tackle. For thwarting cyberattacks alone, the cost could total as much as US$400 billion a year, according to one global insurer cited in the report.
Consumers’ increased appetite for digital solutions, the report says, has opened firms, and by extension, their clients, up to new vulnerabilities related to cybersecurity and data privacy.
“An explosion in digital data, a finite talent pool of compliance professionals to draw from and a more complex risk ecosystem are presenting serious cost, resource and efficiency challenges for compliance,” says Steve Culp, senior managing director and global head of Accenture’s finance and risk practice, in a statement.
To better manage compliance costs, the report says that compliance departments, which have mostly lagged in integrating new technology into their processes, must be more open to adopting technological advancements.
Take the task of risk assessment, for example. Of the 150 compliance executives surveyed, 46% say that it’s one of the most time-consuming activities for compliance, largely because much of the work is carried out manually. Risk mapping or reporting tools, the report notes, can only cover one in three functions required of compliance officers.
Investment in new technology, Accenture suggests, may be on the rise, but firms haven’t leveraged those capabilities to the full extent that allows them to mitigate new threats — even as last year’s report projected that compliance would make strides in embracing new tools and technologies.
In particular, the Accenture report points to the lack of a widespread adoption of artificial intelligence (AI) within the industry as a means of spotting or being alerted to compliance risks, with only 27% and 23% saying that AI and robotic-process automation, respectively, are “impactful.”
On compliance issues, much of the industry, the report suggests, seems to be stuck in a wait-and-see mode — taking a “watchful stance” while others test the waters. That may be because 52% of compliance executives surveyed say their firms still “face difficulties in understanding business needs.”
Some of those firms, the report suggests, perhaps hope to “leap frog” competitors once they know where to make “strategic bets.”
Inaction, more than other emerging threats, poses the “greatest risk” to compliance’s central function as a “strategic, regulatory advisor.”
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