The Compliance Landscape

Through survey responses, researchers mapped the evolving compliance landscape. The majority of respondents’ compliance programs address multiple areas of compliance, with companies with greater revenues in scope of more regulations. The Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation, the Restriction of Hazardous Substances (RoHS) Directive and the Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65) were the top three regulations respondents indicated they are in scope of.

72%

REACH

72%

ROHS

63%

PROPOSITION 65

71%

REACH

70%

ROHS

63%

CONFLICT MINERALS

Your Compliance team

Compliance has become an interdepartmental responsibility, leveraging cross-functional resources to meet requirements, which decentralizes compliance tasks from dedicated compliance employees. Respondents indicated they spend the most time on compliance processes, followed by regulation tracking and assessment, which is a growing contributor to the increase in time spent on compliance.

91%
of respondents reported teams are spending more time on compliance efforts since 2015.

Increased Demand

Compliance teams are dedicating more time to compliance efforts, a trend that was also demonstrated in 2018. While the majority of respondents indicate they currently spend more time on compliance, they also expect demands to incrementally increase year over year, with 88 percent of companies predicting they will need to dedicate more time to compliance over the next three years. This demonstrates that a steady increase in resources will be required to manage compliance programs.

Increase in
Time Spent on Compliance

NO INCREASE

0-5%

INCREASE

6-10%

INCREASE

11-15%

INCREASE

16-25%

INCREASE

26-50%

INCREASE

51%

INCREASE

Program Satisfaction

Companies that have embraced technology are more likely to see improvements in their compliance programs. Across all revenue bands, companies that have embraced technology and automation to support data collection, validation and management are more likely to report they are more satisfied with their compliance program today as compared to three years ago. Companies that have embraced automation for supply chain data management benefit from streamlined processes and efficiencies. Those leveraging third-party solutions are more likely to benefit from technology and features that cannot be built and maintained in internal software solutions.

Companies that were more or significantly more satisfied with their compliance program than three years ago:

43%

MANUAL
PROCESSES

47%

INTERNAL SOFTWARE
SOLUTIONS

75%

THIRD PARTY
SOLUTIONS

53%

MANUAL
PROCESSES

65%

INTERNAL SOFTWARE
SOLUTIONS

82%

THIRD PARTY
SOLUTIONS

The Average Cost
of Compliance

The average cost of compliance is significantly higher than the salary costs estimated by respondents. Costs also accrue in processes related to design, governance, compliance tolls, supplier engagement and data governance. As demands continue to increase year over year, companies — particularly those that rely on manual processes — can expect to see the associated cost of compliance rise.

MID-SIZED

$295337

LARGE

$527092

ENTERPRISE

$1119970

About the Author

Natalie Picot is an independent researcher and strategy consultant who earned her Master of Business Administration from the Stanford Graduate School of Business in 2015. Natalie has researched and consulted for companies across a wide range of industries. Her work includes market research, competitive analysis and strategic positioning. Prior to her time at Stanford, Natalie spent four years in the compliance and research groups at Soros Fund Management. She earned her bachelor’s degree from the University of Pennsylvania in 2009.

Natalie-Picot-state-of-compliance-author

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