Increasing & Evolving Compliance Management Requirements

The nature and complexity of any compliance requirements varies significantly by industry, geography and function. For example there are specific compliance requirements for healthcare, manufacturing and finance industries and functions. There are also non industry-specific compliance requirements that apply to everyone in the UK such as those for Health & Safety, environmental, employment law, Data protection and privacy as well as information security.

Frameworks such as International Standards Organization (ISO) provide a wide range of industry specific compliance in global quality management. It is quite common for such frameworks and their standards to become the defacto standard required to operate in certain industries.

Top 4 risk areas in focus for 2021 are

  • Cyber & data security (79%)
  • Regulatory change & compliance digitalisation (59%)
  • New technology and AI (51%)
  • Financial Capital and liquidity risks (42%)

Ultimately, these rules, regulations, standards, policies and risks impact almost every business function and activity to some degree across Finance, IT and HR through to sales, marketing, delivery and support – basically all departments,

Compliance management is about ensuring an organisation and its operations adheres to the relevant external and internal rules to avoid and mitigate risk to the business, ultimately supporting a more sustainable and resilient business.

The Importance of compliance management

Whilst the complexity and costs associated with ensuring compliance can be significant, the cost of non-compliance can ultimately be many times greater leaving organisations of any size exposed. The potential direct and indirect costs of compliance failures on an organisation will depend on the nature of non-compliance.

Often organisations are preoccupied with the direct financial penalties associated with compliance failures but the risk and total cost of a serious compliance failure can be much greater and involve the following:

“If you think compliance is expensive, try non-compliance”

US Deputy Attorney General Paul McNulty

Significant financial penalty
For example, for severe violations of the General Data Protection Regulation involving personal data, an organisation can be fined up to 4 % of their total global turnover for the preceding fiscal year.

Prevention of trading or access to a certain market
A company, professional or management team can lose their right to operate in a market due to non-compliance with the rules and regulations of a governing industry or professional body.

Existential Reputational damage
Potentially greater than the first two – Customer perceptions can result in no-one wanting to buy from or work for a certain brand – even if a compliance issue was linked to a certain product.

Criminal Charges
Where criminal activity has taken place, employees and management teams can be held responsible for their actions or lack of actions and face criminal charges.

Good Business

Compliance Management is often about reducing risks. However compliant operations build trust and our more reliable which is good for business, loyalty and justifies a premium.

These factors and risks are the driving force behind businesses of all sizes allocating more resource and budget to manage compliance and key risks across their operations and to their business.

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