Regulatory compliance is crucial for businesses and not only those in the financial sector. It’s worth noting that it’s not only about fulfilling your compliance obligations. There are many positive reasons to push regulatory compliance in your company.
This article will outline the importance and the benefits of regulatory compliance.
Why is Regulatory Compliance Important?
One of the most important benefits of regulatory compliance is protecting the company from fines, lawsuits, or penalties. JP Morgan famously paid a $125 million penalty to resolve the US Securities and Exchange Commission (SEC) charges. The charges came because of widespread record-keeping failure across the company.
Improve your Company Reputation with Regulatory Compliance
Compliance is an excellent foundation for building your company’s reputation. You can create an ethical company by following your industry’s laws and regulations. It will help you get noticed in a positive way with your current customers, suppliers, and future customers.
Staying on Top of Cybercrime
It’s not only companies that offer financial services that need to stay compliant. All businesses should strive to be regulatory compliant. It’s better than believing in a false sense of security. It helps to boost your data security. When your data is safely protected can decrease the possibility of a severe data breach.
What is the Importance of Environmental and Regulatory Compliance in a Business?
Your compliance officer can conduct an environmental compliance report with his compliance team. This report can outline the compliance requirements with environmental laws, regulations, and standards. It can also highlight any permits your company may need to practice its business.
Environmental and regulatory compliance is important as you can reduce the legal and operational risks of being non-compliant. You can also determine the resources you need to make sure you are meeting environmental and regulatory compliance requirements. It will also help you discover different jurisdictions in other areas.
What is the Regulatory Compliance Function?
Regulatory compliance management uses regulatory compliance functions to protect an organization from risk. You can separate the regulatory compliance function into five different areas:
- Responsibility and identification
- Monitoring and detecting
A compliance program can help businesses meet rules and regulations. Also, when problems do arise, they act quickly to resolve them. Additionally, if a company can commit to regular internal audits. The company has a higher chance of meeting any independent external audits.
What Are Some Benefits of Maintaining Compliance?
Although this is vital, it’s not all about keeping the regulators happy. There are lots of other benefits of maintaining compliance in your company. Here are seven benefits that show how critical compliance can be. Work your way through the list and see how it can make a difference in your business.
All Compliance Requirements in One Place
When you start maintaining records and keeping track of your compliance efforts, you can keep everything in one place. It can give your company peace of mind when you have one designated area for compliance data. You don’t have to spend time searching for necessary information, as you can instantly find it.
Makes Collaboration Uncomplicated
Looking after your compliance requirements improves collaborations across the board. You will have created a positive trend in how you conduct your business. Your employees can see this and will understand how important it is. On top of this, if a regulator needs to check your compliance. You can quickly retrieve what they need.
Provides Visibility into Compliance Performance
Your company will always have complete visibility when it comes to compliance. It can quickly retrieve data and, most importantly, monitor how they are doing. Also, when compliance is lacking in an area of the business. The company can dedicate attention to problem areas and reduce compliance risk.
Automates Compliance Processes
Trawling through numerous spreadsheets is never fun. If you are doing this in your compliance department, it’s time to think again. Automation is a no-brainer. It speeds up your compliance and gives you many options for compliance reporting. It helps you stay a step ahead instead of playing catch-up.
Simplifies Tracking Regulatory Transformations
If your company monitors regulatory changes manually, this will not be possible in the future. Regulations will increase as industries evolve. You can better meet regulatory obligations by tracking changes with a digital solution. It will save you hours scouring the internet for the latest changes.
Lowers Operational Cost
If you are not maintaining your compliance, the possibility of receiving a fine or penalty will be higher. Having a system to maintain compliance can help reduce the compliance cost of fines and regulatory penalties. These costs might not seem much at the time, but they can add up to thousands of dollars or more.
Boosts Customer Satisfaction
When you use a company’s products or services, the chances are you will only use one that has a stellar reputation. You’re not interested in a company that has not followed the rules and regulations. Therefore, it’s in your company’s best interests to protect its image. One of the best ways to do this is to ensure regulatory compliance.
What are the Five Key Functions of a Compliance Department?
You can break down the compliance department into five different functions. Each function has its importance in maintaining compliance.
Responsibility and Identification
Designate a compliance officer and team to handle your compliance efforts. A dedicated team will be more effective, rather than adding the burden of compliance to another department. The compliance department’s responsibility is to identify the laws and compliance regulations. These can be federal, municipal, and state rules.
Create a compliance program for the company so that you can stay on top of it all. It will prevent any problems with regulators and the stigma attached to receiving a fine. Design and implement controls to help reduce compliance risk. Always document the compliance processes, with specific instructions for each role.
Monitoring and Detection
You can measure compliance by identifying a particular piece of data. You can then put this data into a central database. Collating information using a digital solution is the easiest way to do this. If regulations change, you can update your processes. You can also train the relevant staff on the updates.
When there has been a breach of the compliance controls, the compliance department needs to take immediate action. The resolution needs to be made by the right person and in the right area. A good corporate governance structure can ensure the correct escalation.
The compliance department tends to get a negative reputation for stopping others. It’s good to promote the compliance department as a partner. One that is helping all the company departments work together for the business. You can promote it as an internal advisory partner.
Why is Compliance Good for Employees?
When compliance is part of an organization’s culture. The employees work together for the company’s good. There is a clear understanding that the company takes its compliance efforts seriously. It boosts employee engagement. Because employees understand they have a role in meeting compliance obligations.
What are Examples of Regulatory Compliance?
There are many different types of regulatory compliance. It all depends on your industry. It can be anything from handling personal data to ensuring payments are secure. Here are a few of the most important ones to be aware of:
- EU’s General Data Protection Regulation (GDPR)
- Sarbanes-Oxley Act (SOX)
- California Consumer Privacy Act (CCPA)
- Dodd-Frank Act
- Payment Card Industry Data Security Standard (PCI DSS)
- Health Insurance Portability and Accountability Act (HIPAA)
How do you Ensure Regulatory Compliance?
Ensuring regulatory compliance is not difficult if you approach it correctly. First, a company should determine the mandates and requirements necessary for their industry. The next step is to create a process to meet these regulatory requirements so the company can be compliant with them.
It would help if you carried out regular in-house compliance audits. The audit must look at the compliance processes, policies, and user access controls. These audits help to review how well you are following the regulatory requirements. The audits can also prepare the way for any independent external formal audits.
Why is Compliance Important in the Workplace?
With so much at stake, you must take a proactive approach to compliance. Compliance is so important in the workplace as it can help to reduce the amount of risk to a company. For example, an audit compliance requirement is to back up data. Not doing so could result in lost data or even destroy a business.
A compliance management program checks all the business processes. In effect, it helps to fine-tune processes and increase their effectiveness. The knock-on result is an increase in productivity and profit for the company. An example would be better data management because of following the rules and regulations related to data.
Get to Grips With Your Regulatory Compliance
You can take steps to adhere to compliance regulations. This article will give you greater insight into the importance of regulatory compliance. It’s not only about staying compliant with the regulators. Compliance can boost your data security, help avoid costly fines, and improve your company’s reputation.