How Technology Facilitates Compliance Programs: PwC

Companies with effective compliance programs are optimistic and innovative and are building a risk culture.

Effective compliance within organizations has taken on outsize importance in the current environment of tough regulatory enforcement and increasing pressure from global movements and watchdogs, such as whistleblowers, activist groups and investigative journalists.

Executives backed by robust ethics and compliance programs can confidently take risks and grab new market opportunities. Compliance failures can expose an organization to reputational damage, fleeing customers and massive fines.

PwC recently sought to identify how a minority of companies are excelling in this environment, and how technology is helping them become more agile and effective in their compliance and ethics risk management efforts.

PwC surveyed 825 risk and compliance executives around the world about their organizations’ compliance and procedures, training and communications efforts, and monitoring activities; the technologies that facilitate those activities; and their benefits to the organization.

Only 17% of respondents purported to be very satisfied with the effectiveness of their compliance programs, while 45% were somewhat satisfied and the remainder ranged from neutral to dissatisfied.

Among the very satisfied group of executives, 85% rated their compliance program well above average relative to their peers, and 52% said their organization was more innovative than their peers.

Fifty-one percent of the very satisfied respondents also said their organization got significant value from its risk management program, and 65% said their internal audit function contributed significant value.

These executives were bullish on their near-term prospects, with half anticipating revenue growth of at least 5% per year for the next three years.

The study found that while being innovative and building a robust risk culture were important, these executives differed significantly from their peers in how they executed compliance risk management. They “take a more comprehensive and current approach to compliance risk management as enabled by technology,” the report said.

For one thing, they invest in tech-enabled infrastructure to support a modern, data-driven compliance function. More often than their peers, they use data analytics tools, dashboards and compliance monitoring — the top three technologies they have in place. And nearly half also use data warehousing and data extraction tools to support real-time analytics and monitoring activities.

These executives increase the effectiveness of compliance-monitoring through analytics and use of technology. Sixty-six percent said they used technology to monitor their employees’ compliance with ethics- and compliance-related policies and procedures. And more often than their peers, they use technology to monitor 10 risk areas, including cybersecurity, fraud, gifts and entertainment, social media and trade compliance.

In addition, they streamline policy management to increase responsiveness and boost policy and procedure effectiveness more often than their peers. They do this by keeping codes of conduct, policies and procedures current and accessible across their organization. They also use policy management software to facilitate streamlining, and they measure the effectiveness of policies and procedures.

Finally, these executives take advantage of information and technology to provide targeted, engaging and up-to-date compliance training.

To-Do List

The PwC report suggested several actions companies can consider for building effective risk compliance programs:

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