Key Findings from Dun & Bradstreet Report
Brian Alster, Global Head of Supply & Compliance at Dun & Bradstreet, outlines results from the Dun & Bradstreet 2018 Compliance and Procurement Sentiment Report. With data gleaned from business leaders across compliance and procurement functions, he discusses the top concerns and challenges and offers a look at how the emerging trend of convergence of these areas can help them.
If you drew a Venn diagram for your compliance and procurement offices, how much overlap would there be? If they’re still separate circles, then you should consider the shared objectives that nudge them closer together: mitigating risk, reducing cost and creating modern, effective due-diligence programs. Many companies are recognizing and trending toward this overlap by aligning responsibilities and oversight of compliance and global sourcing.
We recently quantified and evaluated the key synergies, concerns and satisfaction levels across these departments in the Dun & Bradstreet 2018 Compliance and Procurement Sentiment Report. From the pool of 500 U.S.- and U.K.-based respondents, 93 percent of decision-makers are confident in the effectiveness of their compliance and procurement teams. They are also optimistic about the current and future effectiveness of these departments’ functions.
Top Concerns: Enhancing Due Diligence and Monitoring Amid Regulatory Change
Business leaders are forced to balance their compliance needs with business needs – a juggle that is proving difficult to maintain. Fifty-nine percent of respondents are concerned about the impact core due diligence activities will have on their business in just the next six months. Finding methods to efficiently meet due diligence needs is a difficult component of risk management, particularly in a regulatory landscape that is changing faster than ever before.
As geopolitical and regulatory risks continue to impact businesses, compliance and procurement professionals need to prepare to tackle significant associated challenges. Survey respondents named the following as their top four concerns for the next six months:
- Customer/vendor due diligence
- Internal training to ensure understanding of regulations
- Ongoing supplier and vendor monitoring
- Implementing a risk-based approach
Each of these concerns can be best addressed by encouraging compliance and procurement departments to learn from one another – compliance educating on regulatory requirements, and procurement providing insight on corporate onboarding and monitoring methods. While these concerns are not new, the solutions available to better manage them are. Automated onboarding tools help businesses accelerate the due diligence processes required by regulators to verify the identities of companies and individuals, validate shareholders and establish beneficial ownership. Companies can even take this one step further with end-to-end corporate regulatory compliance solutions.
Companies Struggle with Regulatory Shifts as Fraud Weakens Brands
Understanding of regulations is an understandable concern as the landscape continues to shift in both the U.S. and the U.K. Over half (53 percent) of respondents said that regulations and/or regulators are preventing them from doing their jobs effectively. At the same time, two-thirds (65 percent) said existing regulations have increased the risk to their business in the last three months. Allocating abundant resources to compliance measures may leave many businesses feeling the strain more heavily because they have yet to streamline their procurement and compliance data in the onboarding process.
Converging compliance and procurement teams also eases strain in identifying or mitigating the risk of fraud. Corporate decision-makers know that it is essential to gather details on your business relationships, yet 58 percent of survey respondents shared that their organizations have been subject to fraud in the last two years alone. More troublesome, 88 percent of this set agreed that the incident impacted their company’s brand, an essential business component.
Technology Offers New Resources to Compliance and Procurement
Organizations are adopting technology as part of both compliance and procurement programs, and over three-quarters (78 percent) of those surveyed by Dun & Bradstreet are familiar with artificial intelligence. However, 36 percent of those surveyed still believe that technology is creating a barrier to effective performance.
The minority of business leaders not seeing the benefits of technology adoption must develop an understanding of the opportunities available, because implementing new solutions enables more synergies between compliance and procurement than ever before. The efficiencies created not only lessen the resources demanded for compliance efforts, but also can eventually drive the bottom line by avoiding costly regulatory fines.
Dun & Bradstreet’s survey findings uphold the notion that further convergence of procurement or supply chain management with compliance and risk management is on the horizon. The newest technology solutions make it easier than ever to ensure data is cohesive across teams and functions. For example, by digitizing onboarding processes that blend know your customer (KYC) data with third-party data, companies can ensure all information is in one place, informing decisions and next-step actions. Expect to see more and more companies adopting AI in their procurement and compliance solutions as they continue to build more cohesive risk management practices.