Compliance feeling regulatory heat in 2023

Compliance officers remain overwhelmingly happy in their jobs. Gender pay parity is still a problem for the profession. And new responsibilities continue to thrust their way onto the scene, forcing practitioners both senior and junior to be nimble in adjusting their focus areas.

One notable constant every year has been respondents indicating lack of support and resources as the No. 1 part of their job that keeps them up at night. Until this year.

The 2023 edition of our compliance officer pulse survey saw keeping up with regulatory policies (20 percent) dethrone resource support (19 percent) as the biggest concern among all respondents. The survey received 322 total responses and was conducted online between September and October.

Respondents primarily represented the healthcare (17 percent), banking (16 percent), securities (11 percent), and technology (7 percent) industries. They most commonly worked at companies with either less than 1,000 employees (37 percent) or more than 10,000 employees (30 percent).

Chief compliance officers and chief ethics and compliance officers comprised 36 percent of the data set. More than half the respondents (57 percent) worked more than 10 years in a compliance-related role.

That keeping pace with regulatory change emerged as the top concern for respondents this year is unsurprising when you consider the current landscape. The Department of Justice has reworked its Evaluation of Corporate Compliance Programs guidance in several key areas since the release of the Monaco Memo in September 2022. Earlier this year, the Securities and Exchange Commission provided an update on the 37 rulemaking initiatives it had in their final stages. Some proposals have since passed (e.g., cyber incident disclosures), while others remain pending (e.g., climate-related disclosures).

Beyond the United States, sanctions enforcement, regulating use of artificial intelligence, data privacy, and combating money laundering and financial crime are all global focus areas that have seen significant developments in 2023. And environmental, social, and governance (ESG) matters, despite losing steam in some regions, aren’t going anywhere.

The volume of work in an ever-changing regulatory environment is pressing, said one survey respondent, a risk manager in the securities industry. Another respondent, a CECO in healthcare, cited fear of the unknown.

A survey question asked practitioners where their respective compliance departments had primary oversight, providing a curated list of key topic areas in focus in recent years. Data privacy (68 percent) led the way, followed by ESG (44 percent); company use of new technologies (29 percent); cybersecurity (24 percent); and diversity, equity, and inclusion matters (18 percent).

The remit of the compliance officer continues to expand. Regulators are paying closer scrutiny, aided by developments in data analytics and investigation capabilities. Practitioners have taken note of these increased pressures and should expect to be put to the test over the course of 2024.

Other notable data points from our survey:

• A new question added this year asked respondents the opposite of what keeps them up at night—where do they feel most assured in their compliance efforts at their respective businesses? Top results included leadership behavior (19 percent), establishing a culture of compliance (14 percent), personal liability (14 percent), and managing people and deadlines (13 percent). Establishing a culture of compliance was also selected as a popular struggle area (18 percent), suggesting significant disparity among such efforts.
• Compliance reporting lines were varied, with most departments going up the chain to legal (39 percent). Reporting to the chief executive officer was the second most popular option (34 percent), followed by a board committee (21 percent), the board itself (17 percent), and chief operating officer (9 percent). Chief financial officer and risk also each received 9 percent but less overall votes.
• As mentioned above, the overall happiness of compliance professionals remains high, with 93 percent of respondents saying they like their jobs. The number increased to 96 percent among CCOs and CECOs. Individuals in those positions mostly said they were in the job they always wanted (33 percent), but other aspirations they strive toward include board member (17 percent), general counsel (7 percent), or chief risk officer (7 percent).

Check out further coverage informed by our “Inside the Mind of the CCO” survey as part of this report package.