In recent years, organizations have tasked compliance teams with an ever-increasing list of new responsibilities. It is up to Chief Compliance Officers to navigate new regulations and challenges involving privacy, cybersecurity, ESG, and subsequent industry-specific requirements. However, businesses continue to ask compliance leaders to do these tasks with fewer resources.
To better understand the challenges facing compliance teams in 2024, BarkerGilmore surveyed Chief Compliance Officers and other compliance professionals from various industries. In these responses, the leaders identified many challenges compliance teams expect to face in 2024.
The Top 3 Challenges Compliance Departments Are Tackling in 2024
Regulatory compliance, budget, and recruiting and retaining talent were the three challenges CCOs commonly listed. Almost half of all respondents listed compliance with regulations as a challenge for the year. Thirty-seven percent of compliance leaders identified budgeting as among the compliance department’s concerns, while 14% of CCOs included talent retention and recruitment.
1. Maintaining Compliance with Ever-Increasing Regulations
Among the respondents who listed the regulatory landscape as one of their department’s top challenges for 2024, CCOs in the financial industry most often reported the concern. A CCO from a private financial company described the challenge as “complying with new laws and regulations in healthcare, investments, privacy, and cybersecurity.” The breadth and expansion of regulations nationally and internationally were common refrains among the CCO respondents. Companies are challenging Chief Compliance Officers in all industries to oversee the myriad changes with the same or decreased staffing and financial resources.
Data privacy and ESG laws and regulations are some of the specific regulatory hurdles CCOs expect to confront in the upcoming year, and the Securities and Exchange Commission (SEC) plans to finalize ESG regulations in 2024. Once completed, the regulations will add to the burden of the compliance department because of the climate-related disclosures. Likewise, data privacy laws in multiple states (including Virginia, Connecticut, and Colorado) went into effect in 2023. Several laws from other states, including Washington, Nevada, Texas, and Florida, have effective dates in 2024. The data privacy laws, which vary by state, create a hodgepodge of requirements with which compliance teams must ensure companies comply.
2. Handling the Pressure to Work with Reduced Budgets
Relatedly, compliance professionals listed budget as another common challenge in 2024, with healthcare CCOs reporting budgetary concerns most frequently. A CCO from a private equity-backed portfolio company in the healthcare industry summed up the challenge as “cost pressure driving increased potential for unintended shortcuts resulting in compliance issues.”
The increasing number of regulations and the expanding responsibilities of the compliance department were some of the reasons CCOs listed resources as a challenge. Other CCOs pointed to the pressure to cut budgets, the focus on stock prices, and the fluctuations of available assets, forcing CCOs to get results with fewer resources. Relatedly, some CCOs noted the challenge of convincing leadership of the need for additional compliance resources.
3. Recruiting and Retaining Top Talent
Large public companies and non-profits frequently cited concerns with recruiting and retaining talent in the upcoming year. Part of that challenge includes finding qualified candidates. As highlighted in 2023, BarkerGilmore found that competition is still high for compliance staff members who can successfully address the company’s evolving needs. The current employment landscape is such that compliance professionals have access to new opportunities for salary increases. Combined with reduced budgets, CCOs will find recruiting qualified staff and retaining exceptional employees to be challenges that will continue in 2024.
Other Challenges Regulatory Compliance and Risk Teams Expect to Confront this Year
CCOs listed several other complications compliance teams expect to handle in 2024, which often overlapped with the concerns about regulations, staffing, and budget, including:
- Increase in Compliance Responsibilities. As one CCO from a private healthcare company acknowledged, the “greatest challenge facing a compliance department is that the function – and thus the profession – is being transformed into a shared services operational department.” Companies often treat compliance departments as a catchall team that gets pulled into leading ESG and DEI initiatives while simultaneously trying not to be roped into performing tasks for HR, IT, and Audit.
- Cybersecurity. With the rise in cybersecurity incidents, including data breaches and ransomware attacks, cybersecurity is becoming a persistent challenge for compliance teams. Moreover, new SEC cybersecurity rules created new disclosure requirements and pushed organizational leaders (other than solely the CISO) to manage cybersecurity concerns.
- Technology. Several CCOs highlighted artificial intelligence (AI) as one technology challenge compliance departments expect to face. One CCO commented on the need to understand how to manage the risks of generative AI. Others observed that compliance teams needed to invest in technology to improve processes, address staffing challenges, and remain compliant.
Engage BarkerGilmore’s Services to Overcome Compliance Department Challenges in 2024
BarkerGilmore has a proven record of success with compliance department placements and consulting. Our distinguished team has decades of compliance experience and is prepared to help executives navigate challenges, implement solutions, and build efficiency in 2024 and beyond through leadership development, compliance department consultations, and executive searches for CCOs. Connect with one of our in-house legal and compliance experts for more information.
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