With regulations across a wide variety of industries on the rise, companies are increasingly focusing on technology to help bear the strain. However, this comes at a cost, with cybersecurity now a growing threat, as Acquisition International explores.
As increased legislation gives companies around the world and across the corporate landscape more work and documentation to undertake in order to remain compliant, many companies are turning to technology to help them reduce their workload and remove human error.
This is backed-up by new research by Intertrust, a global leader in providing expert administrative services to clients operating and investing in the international business environment. According to the findings just over half (55%) of corporates have increased the size of their compliance teams in response to the mounting regulatory pressures that have emerged over the last five years, according to a new study commissioned by
During the research process, Intertrust surveyed over 500 executives to identify how firms are responding to increasing regulation and their use of technology. Four-in-ten (38%) said they had invested in new technology solutions, with the same proportion increasing their use of external advisors and consultants. Only 17% of firms said they had taken the step of simplifying their business operations to reduce the regulatory burden, preferring to dedicate extra resources to ensure compliance.
With corporates adopting a range of measures to respond to regulatory obligations, respondents believed that technology will play a pivotal role in maintaining compliance with new regulations, with 87% of firms predicting that demand for RegTech solutions will increase in the next two years.
In addition to regulatory compliance, the survey identified several ways that corporates were adopting innovative technology to modernise their core business operations. Here, the leading driver was acquiring off-the-shelf products, cited by 63% of corporates, followed by hiring technology experts (50%), investing in research and development into proprietary technology solutions (33%), and undergoing M&A / JV activity to acquire new solutions (20%).
Jan Willem van Drimmelen, Global Head of Corporate Services at Intertrust Group commented on the findings and highlighted the continuing growth in regulatory technology.
“Disruptive technology is playing an increasingly significant role in the development of corporates across all sectors for both compliance and day-to-day business operations. This presents a number of challenges for corporates that must decide how best to adapt to a changing environment and acquire the necessary technology and skills through M&A, off-the-shelf products, research and development or external support.”
However, such growth in technology increases the risk of online fraud and raises the need for companies to expand their cybersecurity policies.
For example, recently, Sword GRC, a supplier of specialist risk management software and services, published the latest findings from its annual survey of global risk managers, which shows that cybersecurity was seen as the biggest risk to business by a quarter of organizations. Almost 150 Risk Managers from highly risk-aware organizations worldwide were canvassed for their opinions during the survey.
Overall, in the UK, Brexit and the resulting potential economic fall-out was cited as the biggest risk to business by 14% of Risk Managers. The most notable regional variation was in the US where 40% of organizations see cybersecurity as the most threatening risk. The most lucrative opportunities for business were the benefits and efficiencies achieved by harnessing technology followed by expansion into new markets or sectors.
Keith Ricketts, VP of Marketing at Sword GRC commented; “We are delighted to see the Active Risk Manager Survey going from strength to strength with a record number of responses in 2018. As Risk continues to grow in importance and influence in the Boardroom, we have this year focused on the biggest threats and most lucrative opportunities facing business. That cybersecurity is now recognised as the single biggest risk for many organizations is no surprise to us, as it supports the anecdotal evidence we have seen working with our clients in some of the most risk aware industries globally.
“Technology is a great enabler and that has never been more true. The feedback we have from our Risk Managers is that information technology is the key to almost every opportunity for business going forward, whether that is supporting expansion into new markets and geographies, streamlining processes to gain efficiency or harnessing big data and artificial intelligence to power product development and business performance.”
Another piece of research, this time compiled by Allianz in its Allianz Risk Barometer 2019, shows that cyber threats and changes in legislation and regulation, including concerns around Brexit are considered the top risks by UK risk experts, coming joint first in the survey with 48% of responses.
“It’s no surprise to see changes in legislation and regulation as the new top risk in the UK, jointly with cyber threats,” said Tracey Hunt, Deputy CEO, Allianz Global Corporate & Specialty (AGCS), UK. “Uncertainty around Brexit along with concerns around a potential increase in the regulatory burden and global trade disputes have made confidence fragile. UK businesses also continue to be occupied by the threat of cyber-attacks. The consequences of a major data breach have never been greater since the EU’s General Data Protection Regulation (GDPR) came into force with data breaches potentially now resulting in huge fines.”
As such, whilst there is nothing businesses can do to reduce the uncertainty around Brexit within their market, they can make sure they maximise their chances of surviving a breach, or avoid one completely. With technology increasingly making an appearance for companies seeking to comply with the ever-changing regulatory landscape, they will have to work even harder to ensure that their compliance software is safe and compliant with data protection regulation, which could cause a minefield for many companies in a variety of industries over the coming months.