CCI staff share recent surveys, reports and analysis on risk, compliance, governance, infosec and leadership issues. Share details of your survey with us: editor@corporatecomplianceinsights.com.
Verdicts over $100M increase 35%
The number of “nuclear” court verdicts exceeding $10 million has nearly tripled since 2020, with supersized awards growing 27% in 2023 alone, according to new research from Allianz Commercial.
The business insurer’s analysis reveals a 35% jump in “thermonuclear” verdicts over $100 million last year, affecting industries from automotive to chemicals. This trend affects both U.S. companies and international firms operating in the U.S., with defective products accounting for more than 40% of liability claim values over the past five years.
Other key findings:
- Pharmaceutical class actions are becoming more complex, with cancer-related claims creating particular volatility.
- Litigation around “forever chemicals” (PFAS) has led to environmental contamination settlements in the double-digit billions.
- Class actions filed in Europe reached a record 133 in 2023, up 10% from 2022.
- The UK, Netherlands, Germany and Portugal account for over 75% of European class actions.
“Such upwards trends in social inflation are not sustainable for the long term, as the increasing costs from nuclear verdicts ultimately fall back on businesses, consumers, and insurers,” said Joerg Ahrens, global head of key case management, long tail claims at Allianz Commercial. “In the absence of more effective reform, greater cooperation between insureds and insurers, and adopting a tougher stance to settlements are needed to mitigate the spiraling cost of liability claims.
Half of organizations adopt GenAI while governance lags, audit survey finds
Only 17% of organizations have implemented company-wide policies governing generative AI despite half of them already using the technology, according to new research from Wolters Kluwer and the Internal Audit Foundation.
The global survey of 924 internal audit leaders reveals a significant governance gap, with 19% reporting AI guidance exists only at the departmental level. This disconnect appears most pronounced in smaller organizations: While 37% of companies with over 50,000 employees have organization-wide AI policies, only 11% of those with fewer than 500 employees have implemented such governance.
About one-quarter (26%) of respondents are using AI in their audit activities and 36% are researching future applications. The most common planned use cases include audit planning (78%), reporting (75%) and fieldwork (72%).
“The findings of our research show that AI represents a dual opportunity for audit teams: helping safeguard the use of AI within their organizations, and leveraging the technology to benefit and enhance audit operations,” said Frans Klaassen, senior vice president and general manager of Wolters Kluwer Audit & Assurance. “Internal audit is well-positioned to provide supporting advisory services on AI adoption, governance and controls.”
74% of asset managers lost investors due to slow onboarding, survey finds
Asset management firms are losing business due to inefficient investor onboarding processes, with nearly three-quarters reporting lost investors due to delays and poor experiences, according to new research from Fenergo, a Know Your Customer (KYC) and compliance software company.
The survey of 450 C-suite and executive leaders reveals that manual KYC processes and data collection are hampering operational efficiency at 72% of firms with over $51 billion in assets under management. U.S. firms face the highest costs, spending an average of $2,664 per KYC review, 13% more than UK firms and 23% more than those in Singapore.
Other key findings:
- KYC consumes up to 40% of compliance budgets at the largest firms.
- 69% of U.S. asset managers lack adequate systems to respond to changing regulations.
- Managing data is the top transaction monitoring challenge for 41% of U.S. firms.
- Smaller firms with $51-$100 billion in assets spend 33% of compliance budgets on KYC.
“Asset managers have been noticeably behind other financial sectors in digital transformation. Naturally, they will resist change until absolutely necessary,” said Terry Flynn, managing director of asset management at Fenergo. “The survey shows that these firms are struggling with manual processes and outdated compliance technology; and this inefficiency and tech debt is hurting their ability to manage AML risk across the investor lifecycle at a time when regulators are paying closer attention.”
