CCOs keen to enhance ethics and compliance measures, finds KPMG

Chief compliance officers (CCOs) plan to tackle enterprise ethics issues, and investigations and monitoring and testing are the two most popular options, according to a new survey from advisory firm KPMG.  

A heightened awareness of ethical behavior across industries and consumer categories has driven the need for companies to have a solid, executive-level ethics and compliance strategy. Expanding digitization has also focused awareness on high-profile events such as data breaches, questionable sales practices, and organizational misconduct.

A new report from KPMG, however, shows that chief ethics and CCOs are tuned in to the shifting consumer expectations and evolving business environment. KPMG’s 2019 CCO Survey queried 220 chief ethics and compliance officers, and found that most plan to strengthen ethical misconduct prevention and detection through enhancement of key compliance areas.

"There is a growing consensus across all industries regarding the key areas organizations need to focus on and enhance, not only in ethics and investigations but also on the maturity of ethics and compliance programs," Amy Matsuo, KPMG principal and Regulatory Insights national leader, said. "This is likely driven not only by a commonality of risks but also converging business models." According to the report, rapidly expanding digitization has been driving a convergence in business models.

The top areas that CCOs said they plan to enhance in terms of ethics and compliance activity were investigations and monitoring and testing, with both at 65%. Other areas respondents said they would target were data analytics (32%), regulatory change management (32%), and reporting and data visualization (32%).

The main drivers for targeting the above activities, according to the survey, were protection of brand and reputation, need for real-time detection and responsiveness, and the presence of innovative technology and automation.

CCOs were also asked which obligations they intend to refine via their compliance efforts in 2019. Ethics was the number-one priority, at 66%, while privacy, product safety, time and expense compliance, and third-party vendor management were identified by 27%.

The top focus area for further integration in support of ethics and compliance was training (67%). Investigations and monitoring and testing were identified by 55%, while due diligence and governance of compliance were tagged by 26% and 24%, respectively.

The report also found that board of director engagement in ethics and compliance oversight and supervision was strong, with 39% of CCOs strongly agreeing. Respondents also said that business line ownership and accountability for ethics and compliance was well-established, with more than half strongly agreeing. However, 53% said that the ethics function needs to continue working to achieve a “trusted advisor” relationship with the business front lines.

"Increased public awareness and regulatory focus – along with market pressures for greater agility and real-time responsiveness to identify misconduct – are driving organizations to improve their investigations function," Matsuo said. "Integrating investigation activities more closely with ethics and compliance risk management by enhancing investigation reporting and investing in new technology, such as AI, can help to consistently identify and analyze root causes and trends and improve the production of investigation resolutions."