In the modern age of data, servers, and lightning-fast transactions, business is happening faster than ever. It’s also more complex than ever before. Government regulators have struggled to keep up with the increasing changes in business practices, technologies, and new growth areas within industries. However, every year, regulatory requirements change and compliance demands on organizations grow.
What Corporate Compliance Means in 2018
Compliance is becoming a huge challenge for businesses large and small. Over the past decade, regulatory requirements have grown to their largest in history. Over the period from 2008 to 2015, organizations saw a 492% increase in regulatory changes, according to TechCrunch. Famously, in 2014, Citi had over 30,000 employees working on compliance alone.
Needless to say, compliance requirements, especially in the financial industry, are at a peak. They’re also constantly changing and meeting all the requirements is a constant struggle to stay up to date. In a recent report, PWC outlined the job description of a modern Chief Compliance Officer. The job title itself is fairly new for many companies, and the responsibilities are wide-ranging.
The Rise of the Chief Compliance Officer
Compliance officers are responsible for keeping up to date with changing regulations. They also plan for the organization’s compliant entry into new markets or diversifying products. A key part of a Chief Compliance Officer’s job is using data analytics to guide compliance for dynamic regulations around the world. The CCO also coordinates risk management and business continuity in the case of a crisis incident. When something goes wrong, it’s up to the CCO to present a plan to limit the downside, protect customer information, and report on steps taken to regain control.
With so many key responsibilities, the importance of the Chief Compliance Officer within organizations is also growing. According to research from Deloitte, 57% of Chief Compliance Officers now report directly to the CEO or Board. This indicates that Chief Compliance Officers have a new level of decision-making ability and resources in 2017 than ever before.
Despite such levels of autonomy, most CCOs are still wary of the burdens of compliance. Confidence in organizations’ abilities to meet compliance requirements is still low. In the digital age, the same Deloitte report found that only 32% of CCOs were confident in their IT systems to stay compliant and withstand a crisis. Since every new IT system your organization adds increases your compliance risks, CCOs and organizations, in general, are understandably worried about using new technologies, even when they may help the company grow or become more efficient.
2017: The Year of RegTech
A new trend has emerged over the past few years and exploded in 2017. Forbes has called 2017 the Year of RegTech, which stands for regulatory technology. These software and cloud services promise to automate regulatory reporting and documentation, all while staying up to date with the most recent regulations.
While RegTech shows real promise to reduce the compliance burdens for organizations, systems can be difficult and expensive to install. This is especially true when custom RegTech is needed to integrate with existing accounting and information management systems. RegTech is becoming an enormous industry, and as it evolves, it promises to make regulatory compliance much easier for many businesses.
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