By Joy Deep, Director of Digital MarketingMaintaining compliance with regulations helps businesses ensure that they are in good standing with authorities.
Employees might think of regulatory compliance management as a burden. However, if you view compliance as part of your risk management efforts, it becomes clear that compliance helps drive, not hinder, business growth.
Here are some other common misconceptions employees have about regulatory compliance.
1. It Is Easy to Implement and Comply With Regulations
In reality, compliance is not a one-time effort; it requires ongoing maintenance. Organizations must continually review their processes, policies, procedures, and environments to ensure they keep up with changes in regulations. This process can be time-consuming and challenging, especially regarding bank regulatory compliance.
Companies with effective policies leverage technology to automate their compliance processes as much as possible. Doing so reduces the manual effort required and makes it easier to stay up to date on regulatory changes. Reduced manual labor also improves accuracy.
2. Compliance Gets in the Way of doing Business
Some companies have grown to view compliance so negatively that they believe it restricts business. Indeed, organizations have historically lobbied against laws they predicted would make it more difficult for them to operate.
There are certainly cases when opposing laws play a critical role in prioritizing long-term business needs, but compliance most often boosts businesses.
So, what is regulatory compliance? Companies and employees should view compliance as business protection, not prevention. Here are some of the many ways compliance protects businesses from risks:
- Good reputation: Companies that are compliant and have a good standing with authorities enjoy greater trust from customers, partners, suppliers, and other stakeholders. This trust boosts brand value and attracts more business opportunities.
- Financial savings: Gaps in processes or controls cost businesses money through fines, legal fees, and customer refunds. Compliance departments can identify such gaps and suggest ways to reduce costs, which is a top priority for banking regulatory compliance.
- Risk reduction: Companies must comply with the latest regulations or face penalties. This motivates companies to stay updated with changes in their industry and take measures to protect themselves from any potential risks.
3. Compliance Hinders Profits
Compliance can restrict how organizations operate, but it does not prevent legitimate business from taking place. When companies eliminate risk through compliance, they ensure the longevity of their business, which serves the bottom line far better than focusing on short-term profits. That’s because the trust built from compliance leads to long customer relationships. Businesses also gain the ability to charge higher premiums than their competitors.
Effective companies include compliance in their efforts to improve business processes. Organizations are in the best position to maintain compliance by removing bottlenecks and filling gaps in the quality management process. Compliance departments can also make robust and proactive decisions that appeal to a market increasingly aware of compliance concerns and lapses.
4. Checklists Keep You Compliant
Checklists provide an excellent starting point for most companies but do not guarantee compliance. This method relies on manual effort, which introduces the risk of human error. This is an especially expensive risk for financial regulatory compliance. Organizations should instead approach compliance by establishing a comprehensive program. It should chart a direct path to meeting its compliance goals. Here are some elements of a comprehensive program:
- Technology solutions such as software tools, cloud computing, and analytics to manage data
- Regular training for personnel on compliance issues
- Proper documentation and records management
- Process automation
- Risk assessments
5. Compliance Is the End of the Road
When addressing how to maintain compliance with regulatory requirements, remember that compliance is a process, not a destination. Laws, technology, consumer needs, and business processes are constantly changing. These continually introduce the risk of vulnerabilities in even the best compliance programs.
Consequently, companies must continue to treat compliance as a priority long after meeting their initial goals. Here are some of the many ways companies can achieve ongoing compliance:
- Continuous monitoring of their processes and procedures
- Regular risk assessments to identify weak points in security or data protection
- Developing plans to react quickly when any incidents occur
- Periodic reviews of compliance policies and procedures
The Bottom Line
By understanding the misconceptions around compliance, companies can accurately assess its importance and build robust programs to ensure they meet all of their regulatory compliance requirements.
With an effective compliance program, businesses can enjoy greater trust from customers and partners while reducing the risk of financial penalties.
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