Professionals claim compliance represents a risk to global business
Compliance has become so complex that compliance professionals fear it is putting global business at risk, a devastating report has revealed.
Compliance has become so elaborate that 78% of compliance professionals say it now represents a risk in itself, according to research among more than 200 compliance professionals by independent global risk consultancy The Risk Advisory Group. They professionals cited increased regulation as their top challenge in the next 12 months, followed by geopolitical events, in particular the EU referendum.
More than 80% felt compliance had become more complex in the past two years, nearly 70% felt more exposed to risk than they did two years ago, and less than one in five feel very confident in their team’s ability to adequately protect the business, according to the report, The Compliance Horizon.
Nearly 60% described their role as safeguarding their company’s reputation, and more than half cited fear of negative exposure as the main driver for compliance in their organisation.
They were also fairly pessimistic about the future. Less than a third of the professionals believe new talent coming into their industry has what it takes to succeed.
Frank Maher, partner at Legal Risk, says: “A decade ago we had not had the Third EU Money Laundering Directive, the Solicitors Regulation Authority had not been created, there were no compliance officers for legal practice (COLPs) nor compliance officers for finance and administration (COFAs), the reforms of the Legal Services Act 2007, including entity regulation, were merely under discussion and, although the data protection legislation has not changed in that time, its impact has been transformed.
“An example of the increased burden in data protection is the deluge of cyber-attacks on law firms which provides a daily test of their compliance in protecting the personal data of clients, their clients’ customers and their staff with potentially severe consequences if they are hacked. We have also seen a massive growth in the use of financial sanctions.
“For an increasing number of firms, matters are becoming more complex as they expand internationally, giving rise to complex issues of cross-border regulation.”
