A recent report by Clausematch has examined what have been the key developments since the US Department of Justice (DOJ) updated its compliance guidance for 2020.
According to Clausematch, the changes made to the guidance last year ‘emphasised how critical it has become for firms to stop ticking boxes and start taking a more practical and dynamic approach to compliance’.
The company detailed that the first key significant development found a year on is that RegTech is the cornerstone of modern compliance. While the 2020 updates may affect a range of different aspects of compliance, Clausematch said it believes they all share a common theme, which is that regulators expect greater accountability and solid proof that firms’ compliance programs are intentional and effective going forward.
This is leading to many companies turning to RegTech to gain an edge, with research by Juniper Research revealing that businesses may be spending over $72bn on RegTech by 2022 and the City of London Corporation calling 2021 a ‘critical year’ for its development.
The report detailed that RegTech represents more than just an efficiency tool and that it is a pivotal change and the ‘next logical evolution’.
Clausematch said, “Put bluntly, staying compliant is becoming harder and harder if you don’t use technology to gain visibility and control over every aspect of your firm’s operations and embed compliance into its day-to-day activities. RegTech is no longer a nice-to-have, it’s a key component of future success.”
Secondly, this last year has seen risk management pushed firmly into the spotlight, Clausematch claimed. The firm said that one of the key takeaways from the guidance is that regular, comprehensive and meaningful risk assessments are critical.
Under the new guidance, prosecutors are required to consider the ‘effectiveness of the company’s risk assessment and the manner in which the company’s compliance program has been tailored based on that risk assessment’. Clausematch said that in other words, businesses not only have to tailor their compliance programs to their circumstances, but they also have top update them are new risks emerge.
In addition, the pandemic has creation a fresh batch of a new risks – with the move to home working seen as a key risk for companies as many were not even close to being fully digital-friendly by March 2020.
Clausematch stated that as companies are getting used to the hybrid working model, risk assessments must remain a key priority. Furthermore, in order to comply with the DOJ’s guidance, companies will be required to evaluate what lessons they have learned from the pandemic and incorporate them into their compliance programs.
There is also a requirement for companies to broaden the scope of their compliance training. In the updated guidance from the DOJ, companies are expected to invest more money in training and development and to make sure it is tailored to the audience’s size, subject matter expertise and sophistication.
This has led to the strong growth of webinars and events over the past year that have driven firms to explore new roads that can help them do this in a way that works for them. To back this up, a recent undisclosed study found companies are expected to spend up to $16bn on compliance training by 2026.
Meanwhile, the scope of topics being covered in these virtual events is widening. Through the working from home model, there has been an increase in focus on issues such as workplace discrimination, sexual harassment and mental health.
Lastly, another key development tracked during the past year for compliance is that compliance teams are now seeking to make compliance training more fun and appealing to their workers.
A survey by Corporate Compliance Insights previously found that 49% of respondents admitted to skip-reading training materials and didn’t listen to audio and detail, while 44% said they didn’t feel well-prepared after completing training. Therefore, compliance professionals are looking to change this.
The Clausematch report can be found here.
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