Setting the pace for innovation
PwC’s 2019 State of Compliance Study
The number and scope of regulations has exploded over recent times with a myriad of new, complex legislative requirements coming into existence with which organisations in Belgium, as elsewhere, must comply, on national, European and international levels.
"In the past, it was mainly highly regulated industries like insurance companies and banks as well as players in the Pharmaceutical sector that lay awake at night. Now regulations impact many more organisations and they need to have adequate systems in place to assure compliance and monitor their compliance. Few organisations in Belgium are currently adequately equipped. This is a domain in which they need to professionalise," states Marc Daelman, Partner, PwC.
The results of our 2019 State of Compliance Study can help them leverage their firm’s digital transformation to achieve this and become a facilitator of that initiative.
Marc Daelman, Partner, PwC Belgium
As the pace of change continues to accelerate, compliance and ethics organisations have to become strategic partners to senior executives so that they can truly facilitate their companies’ digital transformation. How? By moving themselves to the forefront and:
anticipating forthcoming regulatory changes and making plans for how to adapt to them
identifying regulatory compliance risk early during digital initiatives and proactively and quickly responding to possible issues
avoiding the potentially catastrophic costs of non compliance
creating competitive advantage for their organisations
But getting to the forefront requires that compliance programmes be digitally enabled and data-driven.
Compliance executives need a seat at the table at both the overall digital governance level as well as when it comes to programme oversight. The decentralised nature of many compliance programmes can actually be an advantage because resources embedded in the business have a better opportunity to be on the front line of their business unit’s digital innovation. Articulating the total costs of noncompliance can help ensure the compliance voice gets heard.
The costs of noncompliance include such things as fines, but may also include the impact of the loss of consumer trust that accompanies perceived ethical issues, damage to internal morale and loss of competitive advantage if digital and other strategic initiatives fail to realise their full value because compliance risks weren’t addressed.
Dynamics are beginning to find ways to use emerging technologies to streamline operations and control costs.
Dynamics, the most digitally fit of the respondents to our 2019 State of Compliance Study, are significantly ahead of their peers in their use of emerging technologies: 45% of Dynamics currently use robotic process automation (RPA) and another 36% plan to do so within two years.
In contrast, Beginners, respondents who are at a very early stage in their digital journey don’t plan to use RPA or are unsure how they would use it. A similar pattern exists with regards the use of artificial intelligence (AI).
Data can and should bring the lines of defence together. Both compliance and internal audit consume information in the same basic ways to identify, test and monitor risks and controls. As they build a single more comprehensive data lake of risk information, the ability to collaborate and align grows stronger.
Each function has a role in the value chain, but collectively, risk functions become stronger when they work together. Those that collaborate on funding and innovation can deliver value to the organisation beyond what each can do alone.