Fewer compliance and procurement professionals believe that existing regulation has increased the risk to their business and more of them had greater confidence about the implementation of compliance and procurement procedures through year’s end, according a recent Dun & Bradstreet report that updates one released over the summer.
Even as the U.S. implemented several new tariffs and the UK continued to grapple with an EU exit strategy, perceived risk fell as the scope and content of the trade-related actions became clearer.
That number declined 13 points to 52% for the October 2018 sentiment report.
So just over half of the respondents thought those regulatory risks had increased between April and June compared with this summer’s report, where 65% of respondents who thought the risks grew between December 2017 and February 2018, the latest report said.
“Compliance and procurement professionals across the globe all want to mitigate risk, reduce costs and implement world-class due diligence programs,” said Brian Alster, Dun & Bradstreet’s global head of supply and compliance, in a press release. “By gleaning collective feedback about perceived roadblocks and successes alike, we can better solve for some of the issues that are preventing these functions from achieving their fullest performance.”
The October Sentiment Score was 108, representing an 8-point increase over the score seen in the earlier report. Alongside the reduction of perceived regulatory risk, the higher score was driven by greater confidence regarding the implementation of compliance and procurement procedures through year’s end, with just 41% expressing concern over those activities in October versus over half, 55%, in the earlier report.
The rising score was tempered by a small decrease in the perceived current effectiveness of compliance and procurement functions — from 93% in June to 88% in October.
The October report was prepared via online survey conducted July 6 to 25 that interviewed over 600 decision-makers from the U.S. and the UK. One-third of respondents represented large corporations with more than 1,000 employees, 85% represented companies with annual income of over $1 million, and 45% represented company income over $10 million.
Respondents were asked how they view technology as it relates to their specific duties within the compliance and procurement function. Ninety percent saw technology as a key enabler of market research and analysis, and 88% saw potential for technology to enhance both process management and monitoring supplier performance. Notably, only 61% thought technology would help improve communication or allow better monitoring and analysis of large amounts of data, and just 54% thought technology could help better automate workflow. Technology was seen as a barrier within law and regulations by 31% of respondents and a barrier in terms of generating internal company by 22% of respondents.
Fraud remained a major concern among compliance and procurement decision-makers, with 72% reporting that fraud has had an impact on their company’s brand in some way.
Most concerns surrounded issues contributed by policy and technology. Thirty-seven percent said they faced issues understanding regulations and the risk-based approach, as well as implementing supplier, vendor or customer due diligence and developing a clear policy and related training. And 24% reported that monitoring tools suffered errors in detecting changes to the status of entities of individuals and issues related to automation and data population. Notably, 8% or less of respondents saw manual processes, ineffective anti-bribery or corruption checks, or a lack of resources as contributing to fraudulent activity.
Alster made additional comments on the growing responsibilities being shifted to procurement and compliance functions as customers become more socially conscious in a February 2018 interview with Francis Churchill of CIPS. “Companies want to protect their brand and it’s why procurement officers are now being asked to ensure that the supply chain is free of any kind of nefarious actions that could tarnish the brand — even if it’s not directly linked to them,” Alster said.
Compliance and Procurement
Dun & Bradstreet found that many respondents saw a clear benefit in bringing together tasks from the compliance and procurement functions.
Over 50% thought combining the two would be helpful in areas like process management, vendor management, data management, creating best practices and regulatory areas. Some thought, however, that a closer relationship would make market research and analysis more difficult, and just 31% thought doing so would be helpful for internal company buy-in.
Overall, 56% of respondents who don’t currently combine compliance and procurement functions said the convergence would have a highly or fairly positive outcome.
Global sanctions remained challenging for some respondents, with 13% reporting being not very able or not able at all to respond to the shifting landscape. They identified gaps in training and a lack of resources and internal company power to react to changes, as well as the rapid pace of changing sanctions, as key pain points.