Over the last one hundred years or so, the sheer volume of laws, regulations, standards, and guidelines has increased dramatically.
Compliance isn’t just for the financial services or healthcare sectors – it touches every industry and has become a vital part of operations.
Constantly changing regulatory environment
With the regulatory environment constantly evolving, the compliance target is always moving.
You might find that, just when you’ve achieved full compliance, something shifts and you’ve got to tweak your approach to stay in compliance. Your business needs to be able to adapt; otherwise, you put your business at risk.
This is also what makes it so difficult.
/powerdms-assets-photos-328-government-737x394.jpg?width=737&name=powerdms-assets-photos-328-government-737x394.jpg "What Is Regulatory Compliance and Why Is It Important? (1)")
Failure to comply
When your business fails to comply, you open yourself up to potential lawsuits and financial liability.
According to arecent studyof cyber breach cases in the U.S., U.K., and Canada, the number of cases and total losses (penalties and settlements awarded) associated with those cases are rising sharply. In just one year (2017-2018), the average cost per case jumped nearly two-thirds, from $4.4 million to $7.2 million.
Case(s) in point: In a few high-profile, 2017 data-breach examples, Hilton Hotels paid $700,000 to state regulators, Nationwide Insurance paid $5.5 million in fines, and Target paid $18.5 million to settle regulatory actions and claims.
Regulatory compliance helps you protect your business’s resources and reputation. It takes time to build trust with customers, prospects, and vendors, and a big part of that centers on your ethical behavior.
Compliance lays the foundation on which you build your company’s reputation. Sometimes, all it takes is one compliance misstep and you’ve broken the trust it has taken years to build.
By not following compliance regulations, you might even risk losing access to certain segments of your customer base. For example, if you violate HIPAA regulations, you could lose access to certain insurance companies or risk your license with the state.
Finally, think of the time your business will need to spend following a compliance violation, such as handling an E. coli outbreak traced to one of your growers or a security breach because someone hacked into your database.
Protects your company
The regulations are there for a reason – they help protect your business, your employees, and your customers.
Failing to adhere to regulatory compliance requirements can open you up to risks beyond just fines.
For example, security regulations exist to help protect against data breach, financial regulations are there to protect against fraud, and safety regulations are designed to keep workers safe.
These compliance regulations aren’t put in place to make life more difficult (although, in reality, they often do). But compliance with regulations benefits your company as well as internal and external individuals.
How to Implement an Effective Regulatory Compliance Plan
Because regulatory compliance is such a big deal, your business needs to take a comprehensive, intentional approach to creating an effective regulatory compliance program.
Thoroughtrainingshould accompany the program’s implementation to ensure employees understand the importance of regulatory compliance and how it impacts their day-to-day jobs.
Follow these guidelines to establish a regulatory compliance program:
Conduct a compliance audit
Your first step to regulatory compliance starts with a comprehensive audit to determine a compliance baseline and identify where any problem areas lie.
You’ll look at the strengths and weaknesses of everything from security policies to risk management procedures.
Assessing risks, for example, allows you to not only identify them and their likelihood for occurring but also their potential impact on your business.
Once you identify your weaknesses, compliance gaps, or problem areas, then you can put best practices in action.
If you don’t already, you should be reviewing and tracking how much compliance violations have cost your business. Doing so can help when it comes time to ask for budget to mitigate these compliance issues.
How? By enabling you to prove out how much per year the violations are costing your company.
/powerdms-assets-photos-271-office-737x394.jpg?width=737&name=powerdms-assets-photos-271-office-737x394.jpg "What Is Regulatory Compliance and Why Is It Important? (2)")
Compliance officer
The designated role of acorporate compliance officer(CCO) is gaining prominence in many businesses.
The CCO serves as the point person who champions corporate integrity, accountability, and ethics.
With the time-intensive oversight involved in implementing and monitoring a compliance program, the CCO’s sole focus is to stay on top of the ever-evolving regulatory landscape and make the necessary compliance decisions.
Establish and maintain your policies and procedures
It isn’t enough to simply havepolicies and procedures. They need to address the specific compliance areas identified in the audit listed above.
Plus, they need to be reviewed regularly to stay current with the always-changing regulatory landscape. Again, that’s why it’s helpful to designate a CCO.
In addition to having targeted policies and procedure tied to compliance, a key component of policy management involves the need to track when employees have read and signed your policies.
This plays a huge role in being able to prove compliance down the road, if necessary. If you can show the employee knew the policy, read and acknowledged it, and violated it anyway, then the company’s liability significantly decreases.
This provides a much strong position to take action against that employee.
A policy management software likePowerDMScan help you easily maintain records of all of these policy signatures.
Regulatory compliance training
Just like having your policies and procedures tied to compliance issues, you want to “train to your policies.”
If the policy is written to address specific compliance issues, then yourtrainingshould reinforce that behavior and ensure employees comprehend what they are supposed to do.
Employees at every level need to adopt the philosophy that compliance is “everybody’s business” – even if you have a designated CCO to oversee your corporate compliance program. (That’s a key part of your training, as well.)
When your entire workforce understands the importance of compliance (and their role in making it happen), it distributes the knowledge broadly.
Compliance isn’t about a handful of people who know the latest regulations and what that means for operations. Rather, everybody is up to speed on the latest changes and they’ve been trained on how it impacts them.
Continual improvement
Compliance is not a one-and-done program.
Your company needs to build in regular review periods and audits. Plus, your organization should seek input from subject-matter experts (ideally, the CCO) who can track regulatory changes and understand their impact on your business.
This allows you to continually assess the effectiveness of the program and be proactive in your actions.
It helps to automate this review process so nothing falls through the cracks. That’s one of the powerful benefits of regulatory compliance software like PowerDMS.
It allows you to set workflows and reminders to route it to the appropriate people who need to review and make changes.
Now that you understand the critical importance of regulatory compliance (and the challenges you might face), you can use the above guidelines as your action plan.
These steps will help you create an effective regulatory compliance program in your business that protects your resources, your reputation, and your internal and external audiences.
