- New BCG research assesses the topics most relevant to compliance weapons in the face of ever-changing risks
- Cybersecurity ranks first among key topics for compliance organizations, followed by business ethics, data digitization and analytics, ESG and sanctions/trade compliance
BOSTON, November 29, 2022 /PRNewswire/ — The global regulatory environment has intensified, with tougher sanctions and enforcement actions amid growing geopolitical and economic uncertainty. According to a new report from the Boston Consulting Group (BCG), compliance organizations must undergo significant transformations to keep pace with diverse and evolving compliance risks.
Based on a survey of 250 compliance professionals worldwide, BCG’s second annual report Global ESG, Compliance and Risk Report found that cybersecurity was considered the most relevant key topic for compliance organizations today, followed by business ethics; digitization and data analysis; respect for the environment, social issues and governance (ESG); and sanctions/trade compliance.
“In this increasingly complex world, it won’t be enough to simply write policy guidelines and ask employees to follow the rules to stay ahead of the game,” said Katharina Hefter, CEO of BCG, partner and co-author of the report. “Companies that effectively reorganize their compliance operations now will create maximum value for their respective organizations in the face of future shocks.”
Seven Key Topics for Compliance Strategy
The report revealed the following trends:
- Cybersecurity takes precedence: When asked which key topic was most relevant to their compliance organizations, 62% of respondents cited cyber security—10 percentage points more than business ethics, the second most cited topic. More than 70% of respondents (73%) say they are already well or very well placed to improve their performance in this area.
- Geopolitics is on the agenda: As the sanctions landscape becomes more complex and dynamic, this year’s survey revealed sanctions and trade compliance now ranks among the top five key topics for compliance organizations, a jump of 15 places since 2021. Survey participants also ranked geopolitical tensions as a key topic for the first time, ranking 11th out of 19 topics overall.
- Digitization encounters an obstacle: Although survey respondents cited digitization and data analysis As the third most relevant key topic for Compliance Weapons, 52% said their organization hasn’t made much progress on its digital journey. Nearly a quarter (24%) admitted that they manage the development of the digital compliance strategy badly or very badly.
- The regulations place ESG at the forefront: Authorities around the world have published more than 170 new or amended ESG regulations since 2018. Among survey respondents, 43% ranked ESG as one of the top five key topics and 79% said their engagement with ESG has increased over the past two years. About three-fifths of respondents (58%) said regulators had the biggest impact on their ESG efforts.
- Compliance mandates set the tone: In a context of various risks and growing uncertainties, clarifying the compliance mandate and the role of the compliance department for the different types of risks is essential. For example, only around half to two-thirds of organizations surveyed said that key ESG-related topics were included in their compliance mandates, despite the growing importance of ESG.
- Business ethics remains a priority: More than half (52%) of respondents, regardless of industry, region or maturity stage, included business ethics among the five most relevant key topics for their compliance organizations.
- Attracting the right talent is a growing concern: Asked what challenges they foresee for their compliance organizations, 68% of respondents said that “attracting talent” was the top challenge within the compliance organization. Workforce key topic – more than 20 percentage points more than the second most cited option.
“The past year has highlighted the crucial role of compliance. Every business needs a strategy, not only to manage current risks, but also to adapt quickly to changing circumstances, rules and regulations,” said Julia Gebhardt, CEO of BCG, partner and co-author of the report. “Those who develop and integrate comprehensive compliance strategies, incorporating each of the key topics outlined in the report, will gain a sustainable competitive advantage, attract and retain talent, and strengthen their reputation for acting responsibly in a challenging business environment.”
Download the publication here: https://www.bcg.com/publications/2022/global-esg-risk-compliance-function-report-2022
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SOURCEBoston Consulting Group (BCG)
