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Top Compliance and Procurement Challenges and Solutions

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Survey Uncovers Procurement and Compliance Top Concerns: ESG, Fraud, and Sanctions

Environmental, social, and governance (ESG) screening and monitoring has risen dramatically as a top concern among compliance and procurement professionals. Information on ESG can help organizations better understand whether the businesses they work with practice sustainability, are ethical, and have clear strategies and forward-looking plans, but handling ESG within third-party risk management programs isn’t always straightforward. These are among the findings in Dun & Bradstreet’s “Compliance and Procurement Sentiment Report,” an ongoing survey designed to uncover the issues that impact compliance and procurement professionals.

Reporting standards for ESG can be vague, and the information itself can be elusive.
 

We surveyed more than 600 professionals from the US and UK, and this third edition measures sentiment compared against our June 2018 benchmark and the second report, which was published in October. This edition also digs deeper into the challenges of ESG, fraud, the convergence of compliance and procurement, and regulations and sanctions.

 

In this most recent study, survey participants are positive overall, but they are aware of increased pressure to maintain third-party risk management and compliance programs and to plan for the future.

Sentiments remains positive overall

Compliance and procurement professionals are positive. From June to October 2018, respondents’ sentiment went up eight points to 108. However, when responding to this third survey, the overall sentiment dropped slightly to 107. The one-point change in the sentiment score is tied to a continued decline in confidence we’re seeing.

How Compliance and Procurement People Feel About Effectiveness in Role

  June 2018 October 2018 February 2019
Current Effectiveness 93% 88% 86%
Future Effectiveness 91% 88% 87%

 

Across the surveys, decision-makers were more apt to cite the decline in current and future effectiveness of procurement and compliance functions. And the decline in confidence we’ve seen directly correlates to regulated sectors, such as government.

Environmental, social, and governance screening concerns grow

While most compliance and procurement teams agree environmental, social, and governance is important to monitor within third-party risk management programs, it can be difficult to clearly identify those issues. Reporting standards for ESG can be vague and the information itself can be elusive.

When we asked respondents why they were concerned about ESG’s impact on their business, 51% said they need more data to verify entities and 43% said it’s difficult to identify ESG within customer due diligence processes.

Top 4 Concerns in Next 6 Months
June results: Customer/vendor due diligence, internal training to ensure understanding of regulations, ongoing supplier/vendor monitoring, implementing a risk-based approach
October results: Customer/vendor due diligence, internal training to ensure understanding of regulations, environmental, social, and governance, ongoing supplier/vendor monitoring
February results: Customer/vendor due diligence, environmental, social, and governance, internal training to ensure understanding of regulations, ongoing supplier/vendor monitoring\

Sanctions challenges

Regulations and sanctions – and the due diligence efforts needed to meet regulatory requirements that change on a dime – are tough for compliance and procurement professionals to keep up with. Having visibility into crucial information, such as corporate hierarchies and the ultimate beneficial owners, is essential.

But I’ve only scratched the surface here. The third study uncovered more insights into the challenges and opportunities that compliance and procurement professionals face; the report (downloadable below) delves into these topics, including fraud and technology.

In Dun & Bradstreet’s next “Compliance and Procurement Sentiment Report,” we will continue to monitor what these professionals think and we’ll add artificial intelligence and cyberrisk to our topics to explore.

 

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