How to Ensure Regulatory Compliance in Manufacturing Industry?

Internal controls in any organization are of paramount importance as they are defined as rules and procedures established by management or those charged with governance to ensure the timely achievement of the organization’s goals, mission, and vision.

Organizational exposure to compliance risk is increasing consistently while compliance costs are skyrocketing. A reactive approach to compliance creates complexity and forces organizations to be less agile. Previously, organizations viewed compliance as discrete obligations and created multiple siloed initiatives to meet the objectives. These initiatives typically rely on manual compliance management processes burdened with costly assessments managed using error-prone spreadsheets, documents, and email. This reactive methodology makes adapting to new regulatory requirements and changing business environments difficult.

The primary objective of organizations has always been to improve and safeguard the efficiency and effectiveness of their operations, along with ensuring compliance with applicable laws and regulations. However, implementing these priorities, in reality, can be extremely challenging. Recent incidents of corporate failures and data breaches have exposed businesses’ vulnerabilities, leading to a surge in demand for increased regulatory oversight and a more compliance-focused mindset.

Regulatory compliance is when businesses follow state, federal, and international laws and regulations to operate their business. Regulatory compliance helps businesses to set the highest state of conduct, integrity, safety, and ethical behavior in business.

Today organizations need to be on their toes to stay up-to-date with the complex and rapidly evolving regulatory changes. And if organizations are not ready, it may take them up to a year to implement all the regulatory changes. This can have several implications, including impacting revenue and lawsuits.

In today’s complex and strictly regulated world, internal controls are a prerequisite as they protect your organization from unethical behavior, violations of regulatory requirements, and monetary losses. However, are just building internal controls enough for your organization to manage and reduce risks?

The answer is no. Internal controls are essential, but they are continually evaluated for the information they produce in terms of quality, speed, and accuracy. Knowing where to begin when creating a system of internal controls can occasionally be challenging. As a result of these challenges, organizations are changing the landscape of their internal control framework through automation.

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.

When it comes to hiring for a compliance leadership role, it’s important to look for certain qualities and skills to ensure the success of your organization. A strong compliance leader should have a deep understanding of relevant regulations, strong ethical standards, and the ability to communicate effectively and lead a team.

The regulations exist for a reason – they help ensure that organizations operate in a legal and compliant manner. They also protect the stakeholders’ interests and uphold the reputation and integrity of the organizations. If your organization fails to comply, it leads to fines, penalties, and even criminal charges. The Securities and Exchange Commission recently announced that it filed 760 total enforcement actions in the fiscal year 2022, a whopping 9 percent increase over the previous year.