Future-Proofing Compliance - What it means for IT companies

In the contemporary business landscape, the trajectory of compliance has evolved from being a discretionary choice to an indispensable and obligatory facet of organisational operations. This change is driven by a combination of important factors that cover a wide range of global regulatory influences. The increase in global regulatory scrutiny, complexities in regulatory environments, challenges arising from globalization, and the looming threat of legal and reputational risks have significantly accelerated this transformation. Additionally, the advent of technological progress, a heightened focus on corporate social responsibility, the imperative for supply chain accountability, and a surge in enforcement actions have collectively reshaped the compliance landscape.

So, what’s influencing future of compliance? The future of compliance is poised to be shaped by various trends and factors, reflecting the evolving business landscape, technological advancements, and changing regulatory environments. As we look ahead, several key aspects are expected to significantly influence the trajectory of compliance.

Automation and AI, along with the increased development and adoption of RegTech solutions, are anticipated to play pivotal roles in revolutionizing compliance processes. This integration of technologies holds the potential to streamline routine tasks, elevate data analytics, and enhance the identification of compliance risks and patterns. Simultaneously, addressing growing concerns about data privacy and cybersecurity is becoming imperative in compliance efforts. Robust measures will be needed to safeguard sensitive information, aligning with evolving regulatory frameworks to avoid data breaches and associated legal consequences.

On a global scale, the complexity of compliance is set to increase with the expansion of companies internationally. Navigating cross-border compliance challenges will be crucial, potentially leading to concerted efforts in harmonizing international standards. A significant shift involves the escalating emphasis on Environmental, Social, and Governance (ESG) considerations. Companies are likely to face mounting pressure to comply with ESG standards and disclose information related to environmental impact, social responsibility, and corporate governance.

The regulatory landscape is foreseen to undergo continuous evolution, demanding that compliance programs be agile and adaptable to rapid changes. Organisations may proactively invest in technologies and strategies to stay ahead of dynamic regulatory developments. In response to heightened scrutiny, regulatory bodies are expected to increase oversight, particularly in industries with significant social impact or undergoing technological transformations. This increased scrutiny may necessitate greater investments in compliance efforts to mitigate legal and reputational risks.

Simultaneously, fostering a culture of ethics and compliance within organisations is anticipated to take on greater significance. This involves not only meeting regulatory requirements but also promoting a robust ethical foundation and values throughout the business. Collaboration within industries is projected to intensify, with companies sharing best practices and insights related to compliance. This collaborative information sharing is envisioned to be instrumental in helping organisations collectively address common challenges.

The momentum towards real-time monitoring and reporting is poised to persist. Technologies enabling continuous monitoring of compliance metrics and instant reporting will be indispensable for proactive risk management in the evolving landscape of compliance. Furthermore, industries that operate in heavily regulated sectors are experiencing an increase in global regulatory enforcement. This makes it essential for them to develop strong compliance management programs with carefully planned strategies for implementation. The heightened enforcement measures raise the stakes, as any lapses or violations could expose senior leadership to legal consequences and penalties. Violating laws and regulations not only puts an organisation's reputation at risk but also raises concerns in the context of the growing number of rules and heightened awareness of issues like climate change and environmental impact.

To achieve a state of compliance that is resilient to future changes, organisations must diligently address potential lapses in compliance and comprehensively understand their consequences. It is crucial to strategically position compliance so that its influence reaches the highest levels of the organisation.

Currently, there is a perception that only the compliance team benefits from compliance management, rather than the organisation as a whole. To rectify this, organisations must invest in cutting-edge technological tools, conduct frequent training sessions, and diligently monitor statutory compliance, thereby instilling the concept of structured compliance management throughout the organisational framework.

Overall, the future of compliance is likely to be dynamic, requiring organisations to stay agile, embrace technological advancements, and foster a culture of ethics and transparency to navigate the complexities of the regulatory landscape. While the prospect of achieving future-proof compliance may seem challenging, it is indeed feasible by concentrating efforts on key compliance-related factors. This includes addressing the challenges that organisations face in compliance, recognizing the necessary efforts, and charting a course for implementing the best governance and compliance practices. In essence, future-proofing compliance demands a holistic and proactive approach, aligning organisations with the evolving regulatory landscape and ensuring the longevity of responsible and sustainable business practices.

Prasad Nakashe

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Prasad Nakashe is Partner — Risk Advisory at Deloitte India.