Root causes of compliance failures

Most compliance risk is operational — and it grows long before audits detect it.

Compliance risk is often treated as a regulatory problem. Data shows it is primarily an operational problem.

Research from PwC, Deloitte and COSO consistently indicates that around 60–70% of compliance failures originate from operational execution gaps, not from misunderstanding regulations.

These gaps typically include:

• unclear ownership of compliance obligations

• fragmented or manual processes

• controls not embedded in daily workflows

• lack of continuous monitoring and evidence tracking

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What makes operational compliance risk particularly dangerous is that it does not appear suddenly. It accumulates quietly as operations drift away from defined responsibilities and controls.

Most organizations only identify these risks during audits, incidents, or investor due diligence — when remediation is already expensive, disruptive, and urgent.

Studies from Gartner and the Ponemon Institute show that organizations spend 3 to 5 times more fixing compliance issues after failures than preventing them through structured operational controls.

Preventive compliance shifts the focus from reacting to incidents to continuously analyzing how operations are executed. It relies on early risk signals, visibility across teams, and accountability embedded into daily work — not on periodic checks.

In practice, strong operational compliance means knowing, in real time:

• who owns each obligation

• whether controls are executed as designed

• where evidence is generated

• how risk exposure evolves over time

  
  

Without this visibility, compliance will always lag behind reality.

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