A Gartner study of 117 organisations in the second half of 2020 showed that compliance department spending was projected to plateau in 2020 after several years of rapid growth.
In the period from 2017-2019 total compliance spend per 1,000 employees grew more than 42%, from $114k to $162k. However, due to the widespread economic disruption of COVID-19 that figure remained the same in 2020.
Brian Lee, managing vice president in the Gartner Legal and Compliance practice, acknowledged that compliance spending has been impacted by the coronavirus pandemic. “However, the pandemic has significantly increased the workload faced by legal and compliance teams as they grapple with new risk issues and a more remote work environment,” he added.
In fact, the pandemic has heightened a slew of organizational risks that compliance leaders have needed to monitor more closely (see Figure 1).
Figure 1. Risks monitored more closely as a result of COVID-19
A deeper look into compliance department spending found that the median compliance department decreased its headcount between 2017-2020 from 12 to 10 full-time employees (FTEs).
Lee cited one reason for the decrease appears to be a shift in spending away from headcount to technology and outside spending.
“Many compliance functions were allocating more spend in 2020 to external experts, training and communication vendors and compliance technology expenses than in 2019,” he added.
While compliance departments only planned to increase their personnel spending 1.6% in 2019-2020, the median compliance department planned to increase their spending on external experts and services by 30%. Similarly, compliance technology expenses were projected to increase 15% and compliance training and communication vendors spending to increase 13%.
Lee observed that compliance’s mandate has expanded and organizational risks have been heightened by the pandemic. “These spending trends indicate that compliance leaders intend to look for more scalable ways to handle the burgeoning workload rather than simply increasing headcount,” he continued.
Gartner experts recommend that compliance leaders evaluate current technology offerings that enable communication and collaboration and improve efficiency in an increasingly hybrid and remote work environment.
“It’s also critical to work more closely with other functions, including legal and privacy, to better manage new and existing risks within a remote workforce and establish clear guardrails around risk,” said Lee.
Compliance leaders who are facing an increased workload without any increase in staffing should also evaluate technology offerings that offer insight into an expanded compliance risk universe and control for threats to ensure a strong compliance culture.
