2017 Compliance Risk Study | Financial Services

Accenture’s fourth annual Compliance Risk Study indicates the transformation journey for Compliance has entered a new phase in the face of the digital age and escalating margin and performance pressures as financial institutions look to rationalize and reduce costs while improving efficiency. Our 2017 Compliance Risk Study – based on a survey of 150 leading Compliance officers at banking, capital markets and insurance institutions across the Americas, Europe, and Asia-Pacific – indicates that Compliance functions have matured but need to take the next step to enhance their capabilities to increase efficiency and effectiveness. Our research reveals that institutions are choosing different paths to optimization. Regardless of the path taken, the common challenge is keeping Compliance innovative so the function remains sustainable while managing the demands of a transforming financial services business and risk ecosystem.2 COMPLIANCE: DARE TO BE DIFFERENT - ACCENTURE 2017 COMPLIANCE RISK STUDY EXECUTIVE SUMMARYCOMPLIANCE: DARE TO BE DIFFERENT - ACCENTURE 2017 COMPLIANCE RISK STUDY 3A NEW PHASE IN THE TRANSFORMATION JOURNEY Having established its stature within financial institutions, Compliance functions are facing a newer challenge that demands sustainability across an expanded set of responsibilities. Investment in capabilities is projected to increase for 89% of institutions surveyed in the Accenture 2017 Compliance Risk Study over the next two years as institutions manage the demands of the digital age. A COMPLEX RISK ECOSYSTEM DEMANDS CONTINUED I N N OVATI O N Compliance’s role as both a strategic advisor and a risk assessor continues to be challenged by the diversity of risks to understand, monitor and manage. In three years’ time, cyber risk is expected to be in the top three most challenging risks to manage for the majority of surveyed institutions, further widening the gap over more established risk themes such as regulatory compliance risk. This underscores the need for Compliance to continually advance their capabilities and innovate to understand, monitor and manage the shifting demands of the new risk ecosystem.89%OF INSTITUTIONS PROJECT INVESTMENT IN CAPABILITIES TO RISE OVER THE NEXT TWO YEARS. EXECUTIVE SUMMARY4 COMPLIANCE: DARE TO BE DIFFERENT - ACCENTURE 2017 COMPLIANCE RISK STUDYPOWERING UP COMPLIANCE Compliance functions are encouraged to invest wisely to deliver sustainable risk management that is cost effective while maintaining the integrity of the control environment. Our 2017 Compliance Risk Study indicates that while investment in the function is rising and expectations have matured, Compliance has in many cases not taken advantage of the tools and technologies that can help it effectively leverage this investment. As well, Compliance has not taken the steps to equip the function with the right skills and mastery of emerging regulatory topics such as the use of systems and data. Powering up Compliance will have a different context for institutions based on their path to optimization but each institution should collaborate and contribute more across its organization and better leverage advances in technology and tools to allow sustainable innovation. EXECUTIVE SUMMARYCOMPLIANCE: DARE TO BE DIFFERENT - ACCENTURE 2017 COMPLIANCE RISK STUDY 5INNOVATORS, INTEGRATORS AND IMPROVERSThe challenge to address sustainability has resulted in Compliance functions no longer at a crossroads in their roles within their organizations, but rather plotting different paths toward their desired end state.“Innovators” are establishing leadership positions through investments in capabilities such as advanced analytics, artificial intelligence, or managed services.“Integrators” are moving towards becoming part of an integrated second line of defense that shares infrastructure, skills and capabilities with other non-financial risk functions, while a third group of “Improvers” are taking incremental steps as they acquire a better understanding of business expectations that can help them make leap frog investments as they aim to learn lessons from peers. RE ADY FOR TOMORROW’S COMPLIANCEThe rules of the road for Compliance have changed. These are driven by the accelerating demands of the digital age and the expanding awareness of the importance of strong conduct risk management. These are necessitating advancement and sustainability of compliance capabilities. Compliance functions should recognize this shift and enhance their investments if they are to remain relevant to their institutions and maintain their role as both an objective control function and strategic advisor to the business. Without this focus, the future of Compliance functions may be chosen for them. IN DEPTH6 COMPLIANCE: DARE TO BE DIFFERENT - ACCENTURE 2017 COMPLIANCE RISK STUDYA NEW PHASE IN THE TRANSFORMATION JOURNEY Compliance has now assumed its rightful place alongside other functions such as Finance and Risk wit