We live in a world where the pace of change seems to be ever increasing. Indeed, when it comes to trends in compliance, risk management and the regulatory agenda change can feel constant, putting exceptional pressure on compliance leaders and stretching resources and people to their limits. Technology has a large part to play in issues surrounding data protection and cyber security but also offers solutions to the challenges presented to compliance leaders.

The trends in compliance providing challenges for compliance leaders

Here are the top four trends Davies feels are providing challenges for compliance leaders in the short and medium-term:

 1. Environment, Social and Governance (ESG)
ESG topics are high in the agenda for many compliance departments. This broad grouping includes everything from climate change to workplace safety to issues surrounding equality, diversity, and inclusion. Regulators across the US and Europe are establishing new rules and standards across many areas of ESG. The UK for instance introduced mandatory climate risk disclosures in April 2022 making it the first G20 country to place these requirements in law.

Compliance departments must be able to respond quickly and agilely to new regulations. Companies must also take steps to keep stakeholders properly informed of the financial, operational, legal, and reputational risks surrounding ESG regulatory compliance and to demonstrate that addressing these risks are high on the agenda.

 2. Consumer Duty
The Financial Conduct Authority have instituted a new consumer duty designed to ensure consumers are properly informed when they purchase financial products and services of their rights and protections and that consumers, particularly vulnerable customers, are provided with products that meet their needs. Firms have until April 2023 to ensure that new and existing products meet these regulations.

Compliance leaders must therefore ensure they are fully prepared to meet this deadline, that they understand what compliance will look like for their organisation, the consequences of failing to comply and that they have the resources required to meet the new Consumer Duty regulations.

 3. Cyber Security
Fraud and cyber security risks remain high as criminals continue to use consumer uncertainty surrounding rising living costs as a lever for social engineering attacks and to exploit the system vulnerabilities exposed by an increase in remote and hybrid working 

Robust fraud controls, increased monitoring, and adequate staff training around fraud risks are necessary for CCO and CISOs to stay on top of cyber security risks. Additionally working closely with IT and finance departments to attract and retain the best cyber security talent available will ensure organisations are able to pre-emptively respond to potential new cyber security risks.

 4. Privacy
With the amount of consumer data companies have access to increasing exponentially data privacy is a hot-button issue for individuals, organisations, and regulatory bodies. Global policies are shifting in both China and the US and the changes to the UK GDPR requirements are to be expected following the government’s most recent consultation “Data: a new direction” which sought to review potential reforms to data protection laws following the UK’s exit from the EU.

At this time UK organisations should expect to make little change to their existing compliance frameworks but should expect greater scope to structure data privacy risk management in the future.

How compliance leaders can respond to today’s biggest challenges

Compliance leaders can take steps to ensure their department is able to meet the challenges facing the insurance, financial and regulated markets sectors in both the short and long term. Key to compliance and risk management’s ability to meet change will their capacity for:

Greater C-suite and cross-departmental collaboration
Compliance departments are becoming a more integrated function with expanded scope, greater responsibilities, and a seat at the boardroom table. Compliance leaders must continue to be active in organisation-wide risk management and encourage inter-department collaboration on a variety of risk management projects and policies from fraud prevention to data protection.

Utilising data to drive decision making

Organisations across the financial, insurance and regulated markets industries have access to unprecedented amounts of data. Failing to use that data to drive risk management and compliance decision making would be imprudent. Embracing machine learning and data analytics can help compliance departments detect and prevent fraud using predictive modelling and make better, more confident decisions surrounding risk.

Embracing new skills and technologies
Adopting new tech such as AI and automation into the compliance function as part of a wider organisation digital transformation can be extremely beneficial making departments more efficient and speeding up and deepening insights.

Focus should be on the automation of routine tasks and enhancing analytical capabilities.  Ensuring compliance departments have the skills they need to thrive as new technologies are adopted through future-focussed hiring is also critical.

Meet the challenges of the future in the insurance, financial and regulated markets sectors.

At Davies we pride ourselves on our in-depth industry knowledge and years of experience helping organisations remain competitive by staying aware of the trends affecting the compliance function. Our team of recruiters understand the challenges of the current climate and have access to both active skilled candidates and, through our extensive networks, passive candidates not otherwise available on the market.

Contact us today.

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Dave Rose

Commercial Director

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