As the world continues to evolve, so does the regulatory landscape. In 2024, companies will face a plethora of new compliance trends and challenges. This article will explore the major compliance trends for 2024, including the rise of artificial intelligence (AI), the importance of data security and privacy, and the increased focus on corporate sustainability. Understanding these trends will be crucial for businesses to maintain compliance and navigate the regulatory landscape effectively.
1. Regulatory Intensity and Risk Standards
As a result of economic fluctuations and legal actions, regulatory intensity, particularly in the fields of risk management and governance, is poised to rise significantly. Companies will need to focus on agility and mitigation of risk and compliance “shocks” to meet heightened risk standards. Robust risk accountability and governance will be crucial to navigate this increased regulatory scrutiny.
2. Embracing Artificial Intelligence and Automation
AI and automation are set to revolutionize compliance in 2024. According to the latest Accenture Compliance Risk Study, 54% of respondents believe that AI and machine learning will enhance compliance. These technologies can automate manual tasks, reduce human error, and increase efficiency.
2.1. Advantages of AI in Compliance
AI can analyze and interpret complex regulatory documents, identify policy gaps, answer compliance-related questions, and track requests, replies, and reports. It provides a complete audit trail for regulators, reducing the stress of compliance teams.
2.2. The Future of AI in Compliance
As the capabilities of AI continue to expand, it has the potential to address other critical pain points in compliance. This includes comparing and analyzing policies, detecting overlaps in large policy sets, and identifying discrepancies during M&As.
3. Preparing for Global AI Regulations
With the rise of AI, comes the rise of AI regulations. In 2024, the EU is set to implement a legal framework addressing the fundamental rights and safety risks associated with AI systems. Companies operating in the EU, or those with a presence in the EU, will need to align their risk management and regulatory strategies with these new regulations.
3.1. AI Regulations in the US and UK
In the US, the Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence outlines responsibilities regarding AI development, privacy, and data protection. In the UK, the AI Safety Institute aims to minimize the risks of advanced AI and enable its governance.
4. The Importance of Cybersecurity
Despite being a longstanding issue, cybersecurity remains a critical concern for compliance in 2024. As remote and hybrid working become the norm, the risk of cyberattacks increases. Recent research indicates a 38% increase in global cyberattacks in 2022, making cybersecurity a top priority for compliance teams.
5. The Rising Focus on Data Security and Privacy
Alongside cybersecurity, broad regulatory concerns around data security, management, and privacy will continue to be a focal point. Companies will need to ensure robust data governance, risk, and control measures to comply with increasing regulations on data.
6. The Push for Risk Sustainability
Risk sustainability will transcend across regulatory areas, requiring it to be embedded across risk pillars and into financial analysis and business operations. Companies will need to demonstrate “sustainability” in their Risk functions to meet this growing trend.
7. The Threat of ‘Threat Actors’
Regulatory expectations around the detection, mitigation, tracking, and remediation of ‘threat actors’ – perpetrators of financial crime, fraud, and misconduct – will expand. Maintaining consumer protections while addressing these threats will be a critical challenge for companies.
8. Ensuring Fairness in Business Operations
A multi-agency focus on fairness principles, including access, treatment, and product risks, will continue to be a trend in 2024. Companies will need to ensure their practices align with these principles to maintain compliance.
9. The Impact of Innovative Technologies
As technology continues to advance, regulators are applying existing rules to automated systems, predictive analytics, and other innovative technologies. Risk management will be critical to maintain trust while innovating.
10. Corporate Sustainability Reporting
The EU’s Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) are set to change how companies approach human rights and environmental sustainability. Companies will need to track how their third-party partners comply to avoid financial and legal repercussions.
11. Managing Compliance with Limited Resources
As complexity increases, compliance teams are faced with the challenge of managing more with less. A significant number of compliance teams have seen their budgets reduced or their transformation efforts put on hold due to current market trends.
12. Looking to the Future
The future of risk and compliance presents a complex mosaic of challenges and opportunities. Compliance professionals need to embrace change and innovation to navigate this evolving landscape. Harnessing technology, maintaining agility, and staying informed will be key to ensuring success in the face of these emerging trends.