Companies Struggling to Measure Effectiveness of Compliance Function

How confident are you in the effectiveness of your compliance functions?

If you're like many of the business leaders recently surveyed by PwC US and Compliance Week, you may be a bit uncertain about exactly how you want to answer that question.

PwC US and Compliance Week polled senior compliance officers at more than 100 leading US companies, asking them questions about four key areas critical for the compliance function: leadership, reporting relationships and structure; compliance function scope, focus and risk; metrics to gauge program effectiveness; and budget, staffing and resources.

When the results were analyzed, the survey showed that one of the biggest obstacles facing Chief Compliance Officers (CCOs) is measuring the effectiveness of their compliance functions. In fact as remarkable as it sounds --nearly 40 percent of the companies surveyed said they make no attempt to measure the effectiveness of their compliance program.

And yet these same CCOs said that over the next 18 months, they anticipate significant challenges (and severe consequences) when it comes to risk. Almost half (48 percent) believed the likelihood of a compliance failure was high or very high. Even more (65 percent) said the impact of a compliance risk event, should it occur, would be high or very high.

These results echo those of an earlier study in which regulatory compliance emerged as the number one concern among IT, security, and audit and assurance managers from 126 countries worldwide.

Of course, one of the biggest challenges for companies is integrating compliance across the entire function. The study also found compliance functions are highly "matrixed," depending on cooperation with many other corporate functions to fulfill the overall compliance mission.

"Compliance is a complex collaboration, not a single event or function," said Matt Kelly, Compliance Week's editor-in-chief. "It takes place across the organization and involves coordination across the enterprise. Compliance begins with a state of mind at the top, but we can also see that it extends through the enterprise, across its people, processes and systems."

More information about The State of Compliance survey, which PwC says is the first study of its kind, is available at

TAGS: Finance
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