How can managed services spark a compliance and ethics transformation

Collaborating with a strategic partner can help organizations obtain competencies and drive value.

As the global regulatory landscape embarks on a journey of compliance transformation in a post-pandemic world, innovation has become the name of the game for organizations. 

To understand the market sentiment and need for a managed services transformation around the world, our Forensic & Integrity Services team conducted a series of LinkedIn polls, which drew over 5000 responses. One of the primary themes that emerged from the poll was the rising pressure on compliance, risk and legal departments in today’s evolving regulatory landscape. The new normal saw several new regulations being rolled out, impacting large as well as small businesses. For example, the US banking regulators issued several International Financial Reporting Standards to mitigate the impact of COVID-19 and the European Union’s Whistleblowing Directive has outlined regulations for companies operating in the region on the implementation of whistleblowing procedures. 

Organizations will have to understand as well as adhere to these regulations and amendments, which can be an arduous task given the applicability, jurisdictions, complexity, and liabilities that may be involved. With the changing environment, compliance, ethics, and legal department can face a fair number of hurdles. Unsurprisingly, the poll highlighted that 51% of the respondents said that effective implementation is a huge challenge when it comes to these departments. Some of the reasons here may include lack of skillsets within the team, as well as difficulty in maintaining operational efficiency and quality.

The advantages brought by an independent and strategic service provider was another key area that was highlighted in the poll. 90% of the respondents believed that compliance, legal and ethics teams can benefit through an external service provider that can bring efficiency in processes - a crucial element given the complexity of these functions. Compliance departments are typically seen as cost centres and are under constant pressure to optimize costs. An external service provider as a strategic partner can drive a bold transformation from within not only in terms of cost control but also enhance regulatory productivity, improve performance, strengthen controls, leverage technology, and deliver greater returns on investment. 

The future of managed services

When non-strategic functions are merged with or outsourced to a strategic partner, it is important for the service provider to take on the responsibility of providing a specific set of services to its clients, contractually agreed upon. An external service provider-led managed services strategy can easily transform into an extended arm of organizations, while they still retain the control and direct oversight – without the operational strains.