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Just how much pressure are compliance officers under?

The new Hogan Lovells’ Steering the Course II report examines the approaches, concerns, and regional differences of multinational corporations across the globe as they tackle anti-bribery and corruption risk by surveying 700 chief compliance officers, heads of legal, or equivalent.

Respondents had been in their role for at least a year, and were from the following markets: the UK (100), the U.S. (150), France (100), Germany (100), Spain (100), and Asia (150 interviews: China, Singapore, and Japan).

The study focused on four high-risk sectors at the heart of global ABC regulation and investigations: technology, media and telecommunications; life sciences and pharmaceuticals; energy, minerals and natural resources; and transportation, including aviation and automotive.

It’s a sobering read. The survey results depict almost 90 percent of compliance professionals at businesses in North America and Europe reporting they feel pressure to proceed with their growth strategy in Asia, Latin America and Africa, despite their ABC concerns.

This sentiment particularly acute in the United States where 23 percent of compliance leaders feel “a lot of pressure” to press ahead, despite their misgivings.

And 52 percent of compliance leaders say that many people in their business fail to follow their business’s ABC procedures, showcasing the difficulty of incentivizing compliance, as well as the futility of having well-worded policies that are not actually used.

The authors do not pretend that maintaining ABC compliance across the globe is easy; while you can line up the FCPA and the UK Bribery Act fairly easily in terms of compliance, meeting the requirements of France’s Sapin II or Brazil’s Clean Company Act require distinctively different approaches.

And while trying to comply with these laws, businesses are trying to meet the strict imperatives of the EU’s General Data Protection Regulation, which poses its own challenges in terms of the communications and record retention that go hand-in-hand with traditional compliance obligations.

But the solution to the dilemmas noted above is not to deprive compliance departments of resources. But, sadly, that is happening.

The report notes that only 41 percent of respondents said ABC budgets have increased over the last three years – which looks even worse when compared to the 88 percent that saw increases in 2016.

About the same percentage (40 percent) have hope the budget will increase over the next year. (A full 84 percent were optimistic in 2016.)

When asked how compliance leaders implemented their ABC procedures across the globe, fewer than a third had localized supplements to their global policies for Asia (29 percent), Latin America (28 percent) and Africa (24 percent). Only 30 percent make their compliance guidelines available in local languages today, despite 57 percent of them saying they did so in 2016.

And regular training is only an implementation approach used by a third of the respondents.

It would be easy to blame compliance officers for these compliance program deficiencies, but remember the statistics on their diminishing resources.

If at all possible, it is imperative compliance leaders get in front of top-level executives and board members, and remind them to implement improvements today, and not wait for the terrible publicity and financial penalties associated with a significant enforcement actions.

Shareholders and customers alike expect more from their businesses, as do the world’s regulators – authorities that are working more closely with one another than ever before.

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1 Comment

  1. Despite these challenges, I think the future of Compliance professions are bright as the cost and opportunity cost of non-Compliance becoming higher and higher.

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