Is now the iPod moment for compliance?
Automation can provide the assurance and visibility that businesses need now to face the challenges of 2023 and beyond, and this has certainly made us think about how compliance is actually shaping up right now in terms of those challenges they are facing.
Not only are there regulatory changes that are ambiguous but the evolving threat landscape is certainly creating its own additional complications. So, it got us thinking here at QO, What’s really happening at an enterprise level and how are businesses preparing?
Watch our video on our compliance research with enterprise businesses in the UK
So what did we do to find out about the compliance status in the UK?
We decided to reach out to enterprise businesses in the UK and ask them some specific questions so that we could really interrogate where we are today and consider what needs to happen for the future.
Speaking to over 100 enterprises in the UK ranging from industries including fintech, retail, IT technology, and business professional services, we wanted to ensure that the breadth of companies we spoke to could really clarify the picture of compliance today.
But what do experts Gartner think about compliance in the future?
Chris Audet, VP, Chief of Research and Zack Hutto Lead Analyst at Gartner recently explored this in a webinar and had conducting their own research with some interesting results and predictions for the future; “We are entering an iPod tech moment for compliance” commented Zack, referencing the moment that iPods revolutionised how we listened to music.
We also recently wrote an article focused on the power that automation can provide compliance leaders throughout the challenges of 2023 and beyond and this made us consider how businesses are actually shaping up right now. So, considering the our recent analysis and research with UK enterprise business, we decided to review Gartner’s insights and analyse whether Gartner’s research (predominately US based) matched our UK-based enterprise survey results.
Gartner states in the webinar that by 2026 companies will triple their spend on regulatory intelligence technology
When interviewing UK enterprises only 42% of businesses had accurate costs for compliance processes, so in order for the spend to triple, 58% of businesses would need to actually assess what the current compliance costs are. More worryingly, the accuracy of costs was greatly concerning in heavily regulated industries such as Financial services (only 30% actually had a handle of costs). In addition, only 36% of the enterprises we spoke to reviewed key areas of investment so right now UK enterprises are not focusing enough on the investment that is needed.
The QO view is that UK enterprises need to ascertain quickly what their spend is and whether the spend is targeted in the right areas in order to ascertain what the future budgetary requirements are.
‘Governance are the key drivers as well as the persistent and increasing management of persistent threats’ Gartner states.
We’ve certainly seen evidence of this with 74% of the businesses we’ve spoken to focusing on a strategy of risk reduction and 60% focusing on validating controls.
However, whilst 53% commented that they were focused on 3rd party regulatory compliance, this number is frankly not high enough with a key concern over 3rd party management definitely a massive driver in causing risk for enterprises.
The QO View? This number is going to need to significantly increase if enterprises want to take seriously their reduction of risk levels.
Gartner predicts that by 2024, the time spent managing risks will increase 100% than when managing the disruption pre-pandemic . Persistent and increasing disruption, deglobalisation and increase of regulatory fragmentation has further exasperated this issue.
With only 14% of businesses stating they were in permanent state of compliance readiness, it is of no surprise that most time is spent managing current risks, despite 74% stating that they were focused on a strategy of risk reduction. 52% even commented that their current processes are manual and fragmented. When we drilled into individual industries, the statistics were even more concerning:
- Nearly half (48%) of those that were in financial services.
- 80% in manufacturing.
- 52% in IT and Telecoms.
‘Understaffed, overburdened, struggling to keep up with the actions needed to maintain regulatory compliance’ – Gartner.
Whilst Audet and Hutto comment primarily on the Monaco Memo of 2022 where the Department of Justice asked compliance teams to be ready for a more “data led approach” for total regulatory compliance, it would be prudent of us to consider how this is impacting UK enterprises.
Nearly half of the businesses questioned (48%) still said there was a general ignorance of the key risk indicators, couple that with only 8% only never having to face any obstacles in maintaining regulatory compliance, we at QO are not filled with assurance that UK enterprises are ready for the future. With only 17% of businesses questioned being able to strongly agree that they have easy access to all the data they need to access, these are certainly worrying statistics as to whether they are ready to keep up with regulatory changes coming their way.
Overall, what is the QO view on UK enterprise readiness for regulatory compliance changes and threats?
There’s still a lot of work to be done. There are early buds of hope and in some instances half the businesses spoken to are compliance ready, and ready for the rocky road ahead. But that’s not really enough. There is simply not strong enough statistics that make QO think that UK enterprises are as robust and as agile as they should be.
With spending set to rise, yet little visibility on what really needs investment and many already not focusing on the tools – for example, automation – that could support the visibility of compliance posture. With there still being some lack of understanding on the key risk indicators, much is to be done in order for us to be ready for a multifaceted attack of threats and regulatory demand. However, there is help on hand with many enterprises adopting continuous controls monitoring to ensure they have complete visibility of their compliance posture, providing them with real actionable intelligence – so maybe the iPod moment for compliance is just around the corner…..
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