Increasing efficiency by automating compliance processes and workflows

Automation transforms compliance by streamlining workflows, reducing errors, and boosting productivity, allowing teams to focus on strategic tasks and fostering a culture of transparency.

by EQS Editorial Team | Updated: 15.07.2024 | 4 min

One wrong click on an Excel-based checklist leads to a third-party supplier being mistakenly rated as low-risk. A whistleblower report is not escalated due to a miscommunication between departments. A busy compliance officer fails to update company policies following a regulatory change. When it comes to compliance, minor mistakes can have serious consequences, even more so in the face of ever-expanding regulatory activity.

Regulated, transparent business practices require highly-resourced compliance programs – according to US Department of Justice criteria, apparently well-designed frameworks “may be unsuccessful in practice if implementation is lax, under-resourced, or otherwise ineffective”. This is increasingly incompatible with programs based on manual processes, which not only consume more time and resources but also leave room for human error, putting organizations at risk of non-compliance. Automating processes and workflows allows compliance teams to automate routine functions, increasing efficiency and productivity while enabling staff to focus on higher–value strategic tasks.

How automation fosters effective compliance programs

Regulatory compliance is becoming increasingly complex and dependent on cross-functional collaboration, with a large majority of chief compliance officers expecting greater regulatory expectations over the next two years. Subsequently, companies are looking towards technology to shoulder the burden of manual tasks. Traditionally, compliance frameworks have relied on manual processes that involve spreadsheets, paperwork and in-person meetings and training. These programs rely heavily on human oversight, making them cumbersome, error-prone, and difficult to scale. They also lack consistency, are slow to adapt to new requirements, and don’t enable analysis of large volumes of data.

Automating processes and workflows, on the other hand, streamlines multi-step procedures such as data analysis, historical comparison and anomaly detection, alerting supervisors when necessary. This saves time and money, improves productivity and reduces the risk of human error: according to a Deloitte study, cost savings per process for companies that automate a certain number of core processes tend to range from 30 to 44%.

In addition, automating processes and workflows offer a number of advantages that not only streamline workflows for compliance professionals, but also helps them meet their regulatory requirements more easily, such as greater trackability, real-time visibility, facilitated reporting and improved data security. This enables staff to focus on higher value strategic work, such as working with management and employees to foster transparency and compliance culture.

How automating processes and workflows impacts compliance functions

Nearly all areas of compliance management can benefit from some degree of automation, with properly configured technology offering several advantages:

Centralized management of compliance activities. Fragmented information, data silos and unclear processes impede visibility and communication, potentially favoring involuntary non-compliance. Automation enables teams to center activities and resources on one platform, providing a clear overview of all compliance functions and processes for all-round visibility and improved decision-making. In addition, automating processes and workflows can provide clear pathways to adhering to regulatory frameworks such as the FCPA, UK Bribery Act, and Sapin II.

Streamlined workflows and processes. Disconnected processes are a drain on resources. Automation helps streamline a wide variety of workflows, including third-party performance, approvals, reporting, policy management and training, in order to ensure they are executed accurately and in alignment with internal processes. For example, integrating automation with whistleblower applications connects grievances directly with relevant risk groups and companies, ensuring that compliance professionals can respond promptly and appropriately.

Clear policy management and communication. Manual distribution of policies can lead to employees struggling to determine which ones are applicable to them and where to find them. In turn, compliance officers are required to spend time fielding repetitive questions, with little visibility over who has actually accessed which policies. An automated central repository for policies ensures that workers receive relevant information promptly, helping to ensure compliance with regulations and company standards and reducing the likelihood of involuntary non-compliance incidents. At the same time, compliance staff can manage policy confirmations and reporting efficiently, in accordance with standards such as IDW PS 980 and ISO 37301.

Structured reporting. At any given time, companies need to be able to report on the current state of their compliance posture. In some cases, reporting is a regulatory obligation. In others, it can be required by potential customers, auditors or company stakeholders. Automated reporting removes the risks related to manual data collection and analysis and is grounded in constantly updated information, while saving compliance teams precious time and effort.

How to successfully automate compliance processes

Several essential steps are necessary to ensure automating processes and workflows support an effective compliance program that aligns with both organizational aims and regulatory requirements:

Defining requirements

The first step is to assess your company’s specific needs and identify relevant regulatory requirements. This involves understanding the compliance landscape your organization operates in and determining the key areas where automation can bring the most benefits.

Selecting the right automation tools

Choosing automation tools that integrate seamlessly with existing processes and systems is important, as this will enable data to flow from one module to another and enable information retrieval from different sources. Technology should be evaluated based on features, scalability, ease of integration and ability to be customized to the organization’s specific requirements, as well as its capacity to safeguard sensitive information with security measures that meet data protection standards.

Outlining an implementation plan

This should include timelines, responsibilities, milestones, clear delineation of roles and risk management strategies in order to guide the deployment process and keep it on track. Data quality is also a crucial aspect of automating processes, and plans should be made in order to ensure the data used is accurate, comprehensive, consistent and up-to-date.

Training employees

Employees need to be guided in how to use the new technology and how it benefits them. Training should cover the technical aspects of the tools and how they support compliance efforts and a company-wide culture of transparency. To maximize engagement, content can be delivered in interactive and shorter formats such as quizzes and questionnaires that enable participants to learn at their own pace. Ongoing support and resources should be provided to address any issues that arise.

Monitoring

Metrics can include time savings, improved management of compliance documentation, reduced penalties, increased employee accountability and timely completion of compliance obligations. Regularly reviewing these metrics helps in assessing the effectiveness of the automation and making necessary adjustments.

What are potential roadblocks to successfully automating compliance processes and workflows?

It’s worth keeping in mind that even the most well-crafted automation plan can be subject to hiccups, and major shifts don’t always go to plan. Here are some potential barriers to keep an eye out for:

Budget constraints: Some organizations, particularly smaller ones, may face budget constraints. Compliance professionals can make a compelling business case for investment in workflow automation tools by highlighting its ability to help skilled professionals focus on high-value tasks. At the same time, automation’s ability to help companies avoid costly mistakes can even lead to savings down the road by reducing costs related to mediation, audits and reputational damage. What’s more, investment in dedicated compliance technology sends a strong message to the whole organization by placing compliance – and a culture of trust and transparency – at the heart of it.

Cultural barriers and fear of job displacement: Resistance to change can be a significant obstacle, notably when it stems from fears of human roles being replaced by machines. Effective communication and training programs that emphasize the value of automation and how it can benefit both the organization and its employees are key to fostering a culture of adaptability. Involving workers in the implementation process and constantly seeking their feedback and input also helps them feel valued. Studies have shown that companies that reach their automation targets tend to focus on people as much as technology through employee training, capability building and “human in the loop” solutions.

Thinking automation can replace human skill: Rather than substituting the work of compliance professionals, automation enhances it by enabling them to dedicate their skills to more complex, strategic tasks. To be truly beneficial, automation should always be balanced with human oversight, particularly in high-risk areas. It’s important to remember that companies will be held responsible by regulators for mistakes caused by outdated or mis-calibrated software, as Apple discovered in 2019 when its third-party screening process failed to identify an entity on the Specially Designated Nationals (SDN) list due to a spelling variation. Companies must ensure the technology they work with meets the highest standards and that all processes are reviewed by compliance personnel.

Looking to the future with natural language processing

The good news is that advances in AI, and particularly natural language processing (NLP) and large language models (LLMs), are promising to further improve data quality and risk management. LLMs excel at tasks that require computers to “understand” written or spoken human language, enabling automation technology to more accurately identify individual, geographical and organizational entities, pinpoint compliance-related keywords or classify information as risk relevant or non-risk relevant. This has the potential not only to improve efficiency and accuracy of existing processes, but also help organizations stay ahead in today’s dynamic regulatory environment.

A context of growing regulatory scrutiny, technological advancements and cybersecurity and environmental concerns is making automation of compliance processes and workflows increasingly important. Its benefits extend far beyond the compliance field itself: in 2022, 70% of respondents from all industries and regions were piloting automation technologies in one or more business functions, with two-thirds citing improvements in quality control and employee experience alongside cost savings. Investing in automating compliance processes and workflowsshould not be viewed merely as a matter of operational efficiency, but as a component of business resilience that enables companies to showcase their commitment to transparency, ethical governance and a robust compliance culture.