Challenges, Benefits, and Future Trends in Compliance Intelligence
Regulatory compliance, also known as business compliance, pertains to an organization’s adherence to the laws, regulations, and other governing rules applicable to all entities. By utilizing Compliance Intelligence, your software can identify and report on organizations that utilize it without any payment. This tool enables your team to fulfill EHS and sustainability obligations across all operational locations, while gaining a comprehensive understanding of compliance within your business.
Regulations differ greatly depending on the industry and jurisdiction. For large organizations with a global presence, it is imperative to adhere to relevant laws and regulations in all countries where they conduct business. Certain industries, including financial services, information technology (IT), and healthcare, are subject to a multitude of intricate regulations and compliance frameworks due to their impact on the economy, business, and health infrastructure. Furthermore, these industries are at a heightened risk of cyber breaches due to the constantly evolving and complex nature of cyber attacks.
Challenges in Implementing Compliance Intelligence
Generally, regulations are implemented to protect someone or something, whether it be employees, consumers, the public at large, or the integrity of commerce or of business processes. The entities overseeing regulation often focus on several primary areas, including the following:
- Establishing and implementing controls at organizations
- Keeping abreast of and assessing how organizations are complying with laws and regulations
- Identifying and remediating areas where organizations are not complying
- Providing ways for organizations to report on their compliance with laws and regulations
Industries Most Affected by Regulatory Compliance
Regulations are especially wide-ranging and complex within certain industries. The following are among the most heavily regulated industries:
- Health care
- Life sciences
Standards That Help Guide Regulatory Compliance:
- NIST Standards: These standards were set up by the National Institute of Standards and Technology, a federal agency, to guide compliance with some regulations.
- International Organization for Standardization (ISO) and ISO 19600: The ISO is an international body that sets standards in a range of industrial, commercial, and other areas. Its ISO 19600 standard offers guidance on how organizations can set up and maintain a system of compliance management.
- ISO/IEC 27002: This is a standard that recommends best practices to ensure appropriate security for information technology systems.
- COBIT: This is a framework that recommends best practices for managing and governing information technology. The COBIT framework was created by an information technology professional association called the Information Systems Audit and Control Association — now known only by its acronym, ISACA.
Non-compliance arises when the business fails to comply with applicable legal obligations.
Along with non-compliance, lapses in regulatory compliance can lead to several adverse consequences, such as:
Penalties: Penalties, most often monetary, can be one-off or cumulative over a period of time. The penalties for non-compliance are very high, often running into millions of dollars.
Business Disruption: Non-compliance could result in the business being suspended or even debarred from bidding on government contracts. Lawsuits and legal actions can disrupt the organization’s operations and may generate additional losses. This can stall manufacturing operations and result in multiple supply chain vulnerabilities. In addition, they can result in security risks such as data breaches, where sensitive and confidential information may be exposed in the public domain due to poor security measures. Compliance violations result in a reduction in business productivity as levies affect business activities and staff. Such violations can even lead to the suspension of business activities in one area or in extreme cases, the entire organization might be shut down due to the suspension of the business license.
Reputation Losses: Non-compliant businesses suffer a loss of reputation among consumers, clients, business partners, and the public due to negative publicity in the media.
Revenue Losses: The resulting loss of customer confidence and decreased customer churn can lead to a loss in revenues in the long term, lasting several years into the future. The organization may also be subjected to stricter compliance regulations subsequent to an incident, resulting in steadily increasing compliance costs.
Quantifying the Benefits of Compliance Intelligence
Organizations that maintain consistent regulatory compliance management can reap significant benefits and outcomes both in the short term and over an extended period of time. Important benefits include
Avoiding Unnecessary Legal Issues: Regulatory compliance frameworks ensure that all necessary legal obligations are met. For example, industries that require the collection and storage of large amounts of user data can avoid legal issues by following regulations such as GDPR. The cost of compliance, as a result, is much lower than non-compliance.
Increasing Efficiency and Safety in the Workplace: Implementation of rules against discrimination and harassment in the workplace can build a healthy work ecosystem that increases the productivity and efficiency of the organization. Further, enforcing rules related to safety and security can prevent incidents and strengthen resilience.
Fostering Healthy Competition: Regulatory compliance eliminates unfair monopolies that can stifle competition. Complying with such regulations enables fair practices which encourage innovation. Organizations are motivated to offer products and services of superior quality and avoid complacency in design, production, and delivery.
Gaining Better Branding: Adhering to regulatory compliance requirements can help build better public relations as meeting regulatory obligations increases stakeholder confidence. The same can be used in branding and marketing campaigns by communicating the organization’s commitment to compliance processes, ethical codes, and norms.
Reducing Risk and Increasing Profitability: Businesses can reap continued profits when their customer churn is maintained at healthy levels. By following regulatory compliance requirements, customer trust can be sustained. For example, securing customer data against breaches or theft can work as a competitive differentiator. In addition, business partners also appreciate working with an organization that is safe and reliable, resulting in increased synergies and long-lasting partnerships.
Increasing demand for data privacy and in some cases increasing regulations related to data privacy can run counter to the demands for record-keeping concerning a number of other regulations. Here are two especially problematic areas:
- Data Retention: Many regulations require organizations to keep data for long periods of time, sometimes in ways that can make it difficult for companies to comply with data privacy regulations that impose strict limits on how businesses gather and store personally identifiable data.
- The “Right to Be Forgotten”: Data privacy laws often give people the “right to be forgotten” — meaning that organizations must destroy all personal data about an individual upon that individual’s request. Those rights can run counter to other regulations’ requirements that certain data be kept as evidence of compliance.
Emerging Trends in Compliance Intelligence
A regulatory compliance policy is a blueprint based on which an organization draws its compliance practices. It is a declaration of a company, usually in written format, wherein the establishment affirms its compliance and commitment to relevant laws and regulations. It provides necessary details on the procedures and structures created for this purpose such as a regulatory compliance plan and appointment of a compliance officer.
A regulatory compliance policy helps to create a culture of compliance in the organization and is useful in shielding the organization from risk caused by rogue employees. Moreover, given the yearly increase in regulatory information, a regulatory compliance policy acts as a reference to prioritize compliance processes keeping business goals and interests aligned with regulatory compliance.
Leveraging technology for policy and document management helps streamline and simplify the creation and communication of organizational policies, while providing a centralized policy portal to store and access the latest policies.
By following known and accepted best practices, organizations can consistently maintain regulatory compliance.
While not all organizations can have specialized roles such as a full-time compliance officer, the responsibilities for the same can be delegated to existing personnel in appropriate organizational positions and with the support of best-in-class tools.
Here are some general best practices for organizations to follow in ensuring regulatory compliance.
- Stay on top of changes in the regulatory landscape both at the concerned industry level as well as the jurisdiction level.
- Develop and maintain a compliance code of conduct to create a culture of compliance in the workplace, thus encouraging fair and ethical practices.
- Document the compliance processes. This can be done with a clear delineation of the roles and responsibilities of staff involved in compliance management. Such documentation would be valuable during regulatory compliance audits.
- Train employees in regulatory compliance by conducting workshops, training sessions, and periodically assessing them on compliance requirements.
- Periodically review the regulatory compliance policy to correct weaknesses in the policy and to ensure that compliance is up to date with the latest changes in the regulatory environment.
- Automate compliance activities depending on the size and scope of the organization.
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