The risk and compliance landscape is constantly changing. In times of uncertainty, with economic limitations, geopolitical instability, regulatory changes, trade volatility, and a growing rate of cybercrime looming large on organizations of all sizes and industries, the range of risks facing compliance officers has become more complicated than ever before.
Making the Business Case For a Compliance Management Platform
On top of that, organizations themselves are constantly evolving in terms of both business models and people. Owing to these global and local events, disruption is becoming increasingly frequent, with the potential for a longer-lasting impact — thus changing how businesses perceive and approach risk and leverage a compliance management platform.
Risk is a complex subject, and the pandemic established that risk can come in any shape or form and that it can come anytime. What started as the worst health crisis of the century extended to the business world to turn into an economic crisis at a global scale.
Regulatory compliance functions across industries also felt the pandemic’s impact as compliance workflows weren’t adequately equipped to handle the rising pressure from the shift in business operations. The implications led organizations worldwide to move risk and compliance management from being an archaic procedure to a core business function. This mindset shift is responsible for businesses reconsidering and prioritizing their GRC framework to be better prepared for all predictable and unforeseen challenges.
Understanding the different types of compliance regulations
Risk mitigation and compliance management approaches that do more for less are game-changers. As one of the key custodians of an organization’s data, the responsibility then falls on the chief compliance officer to not only ensure that efficient GRC practices are in place but also that their company adheres to the different types of compliance regulations.
Although regulations and laws differ depending on the industry, with some industries more highly regulated than others, there are some common regulations that businesses have to comply with. Some of the prominent regulations include:
Health Insurance Portability and Accountability Act (HIPAA): HIPAA outlines the security and privacy regulations required to safeguard sensitive patient health information. Any company that stores its employees’ healthcare data must also comply with HIPAA — not just healthcare providers and institutions.
Payment Card Industry Data Security Standard (PCI DSS): A set of security procedures and policies, PCI DSS protects customers’ financial data. Any company or merchant facilitating debit, credit, or cash card transactions must comply with PCI DSS.
General Data Protection Regulation (GDPR): A generalized data privacy regulation, GDPR applies to any organization processing the personal data of EU residents.
Sarbanes-Oxley Act (SOX): All public companies in the US must comply with SOX, which protects the public from corporate fraud and misrepresentation.
Federal Risk and Authorization Management Program (FedRAMP): A US government-wide cybersecurity risk management protocol, FedRAMP provides a standardized approach to security authorizations for cloud products and services.
Foreign Corrupt Practices Act: This act makes it unlawful for US citizens and entities to bribe foreign government officials.
At any given time, an organization has to manage atleast a dozen regulatory compliances. Manually managing the compliance programs on a spreadsheet is tedious and error-prone. A compliance management software centralizes and automates compliance processes across multiple locations and functions.
Integrated compliance management for efficient risk mitigation
Efficient compliance frameworks are proactive, agile, and adaptive, and supported by digitally enabled processes. Every organization’s compliance approach will differ based on its own business requirements, which depend on factors such as:
- The sector it operates in,
- Its jurisdiction, and
- The type of regulations it must comply with.
However, the changing world of risk and compliance challenges calls for an integrated compliance management approach for the future, to manage both compliance and organizational needs and to carry out the assessment of internal and external risks irrespective of the industry.
According to PwC’s 2022 Global Risk Survey, “75% of organizations report that having technology systems that don’t work together is a significant risk management challenge”. The need of the hour is to replace legacy systems and spreadsheet-based compliance management processes with intelligent solutions like compliance management software that mitigate regulatory risk efficiently and make compliance programs more meaningful.
The following are key strategies to consider for utilizing an integrated risk and compliance management approach to enable risk-based decision-making through processes and systems.
- Employ a compliance management platform to enable a consistent risk management approach across data analytics, technology, and process automation.
- Establish data and reporting requirements defined by risk and business leaders.
- Create incident and case management policies and procedures to track, record, route, investigate, and close cases and incidents.
- Manage regulatory engagement activities, including but not limited to meetings, examinations, document management, engagement-related data, and information requests.
- Create and maintain a database of obligatory regulations to map them to policies, processes, risks, and controls.
- Set regulatory change management systems in place to identify, track, and analyze regulatory changes and assess their impact.
- Evaluate the compliance program with compliance advisory to determine possible loopholes and prevent breaches that can lead to expensive violations.
- Develop compliance risk assessment protocols to identify high-risk compliance areas in the organization and then direct efforts to monitor and manage them.
What is the cost of non-compliance for an organization?
The financial and legal implications of failing to meet regulatory standards are severe. In 2022, the US Securities and Exchange Commission (SEC) recovered a record $4.2 billion in penalties for non-compliance.
Penalties aside, the cost of doing business (due to business disruption, lost productivity and revenue, remediation expenses, if any, and damage to reputation) makes non-compliance costlier than investing in a robust integrated compliance management system. Migrating from legacy systems to modern risk and compliance management and GRC software is the one step between incurring regulatory fines and aligning your organization to evolving regulations.