Improvement areas for corporate compliance programs

Improvement areas for corporate compliance programs

Baker McKenzie, the renowned law firm, published the results of its survey “Compliance Benchmark 2017: Quantifying the Fundamentals". It highlights various areas of improvements.

This new report  was published on June 18, 2017 and highlights compliance executives and their authorities, compliance staffing and budgets, compliance measures, and current issues. 

The following studies formed a part of the review: PwC’s State of Compliance Survey 2016, AlixPartners’ Annual Global 2016 Anticorruption Survey, KPMG’s 2016 Compliance Transformation Survey, and Kroll’s 2017 Anti-Bribery and Corruption Benchmarking Report. One finding is that more management support is needed to drive the competitive importance of strong compliance cultures.

For full details of the survey results, please refer to the publication on Global Compliance News online. Some key findings:

  • 70% of all companies report that they now have a CCO, down from 76% in 2015.
  • 47% of compliance executives believe that employees view the CCO as the compliance and ethics “champion” at their organization. At the same time, 82% of compliance executives point out that senior leadership formally communicates with their employees on the importance of a compliance and ethics culture.
  • The majority of compliance executives report to senior leadership (67%) and to the Board of Directors (63%) at least quarterly, though 18% are convinced that their Board of Directors does not have a deep understanding of the organization’s compliance and ethics-related risks.
  • 65% of respondents argue that business unit managers should take greater ownership of the compliance culture and agenda. 32% are convinced that their employees do not understand the competitive importance of a strong compliance culture.
  • Not only does a majority (57%) of respondents expect no improvement in their organization’s risks in 2017, 35% even expect increased risk, while merely 8% expect a decreased risk this year.
  • The key variables considered when measuring compliance and ethics-related risks are impact (93%) and likelihood (91%), with velocity ranking third (33%). Most compliance and ethics-specific risk assessment processes include lessons from prior compliance failures/issues at the organization (76%), lessons from recent compliance failures/issues in the industry (70%), and government enforcement trends (70%).
  • Third parties, with all the risks they bring, continue to be the single biggest worry (40%), ranking far ahead of the complex regulatory environment (14%) and employees making improper payments (12%). Almost 50% of respondents maintain a business network with more than 500 third parties.
  • Corruption is still taking a considerable toll on corporate and economic growth. 90% of respondents say they believe their company’s industry is exposed to at least some level of corruption risk, up from 85% in 2015. 28% of respondents even cited significant risk, up from just 22% in 2015.
  • Geographic risk perception increased significantly for Africa (from 59% in 2015 to 78% in 2016) and the Middle East (from 48% in 2015 to 68% in 2016 ). 73% of respondents also indicated significant levels of risk in Russia, compared with 75% in 2015. 67% of respondents pointed out that there are locations where it is impossible to avoid corrupt business practices and cite Russia (35%), Africa (33%), and China (27%).
  • 77% of respondents argued that their company faces challenges in navigating local data protection laws, and almost the same share (76%) ranked ensuring the security of their data as “challenging.” 27% even expected an increase in challenges associated with moving data across jurisdictions.

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