By Ludo Rubin, Director of Product MarketingCompliance is one of the most critical contributions to business success. Yet, many companies sideline this business function in favor of other vital concerns, such as cash flow and marketing. These companies often learn the hard way that compliance issues can create significant expenses in the form of fines. Violations can also negatively impact a company’s image for a lifetime. Knowing how to manage compliance risks brings unique benefits to organizations that treat it as a priority.
The Importance of a Comprehensive Compliance Risk Management Program
It helps organizations identify, assess, and mitigate risks associated with regulatory laws, standards, and policies. It also provides an organized structure and process for measuring, monitoring, and reporting compliance activities. With a comprehensive program in place, companies can achieve the following:
- Protect their reputations by ensuring workers follow ethical business practices.
- Maintain trust with their customers, suppliers, and other stakeholders.
- Minimize the risk of financial losses due to non-compliance or failure to follow regulations.
- Ensure compliance with industry standards and government regulatory requirements.
- Gain a competitive edge through improved efficiency and process optimization.
- Enhance their ability to detect and respond quickly to compliance issues.
- Create an effective way to monitor laws, regulations, and other standards of conduct changes.
Best Practices for Conducting a Compliance Risk Assessment
Conducting a comprehensive risk assessment is essential when developing a risk management program. This should include an analysis of all activities that have the potential to create regulatory, reputational, and financial risks. The risk assessment should also identify any weaknesses in the current system which could lead to non-compliance.
Use these best practices to ensure an effective assessment:
- Involve all relevant stakeholders in the process, including legal and finance teams.
- Conduct a thorough review of all activities that may be affected by compliance regulations.
- Analyze internal strategies for potential risks and identify areas where improvement is needed.
- Review planned or recent changes in laws and regulations which may impact your operations.
- Assess the organization’s ability to respond to compliance issues quickly and effectively.
- Develop a plan for monitoring and testing the effectiveness of the compliance management system.
- Conduct a compliance management system risk assessment to ensure the final plan does not introduce new vulnerabilities.
The Different Levels of Corporate Compliance and Risk Management
Some industries experience much higher levels of regulation than others, such as healthcare, law, finance, and insurance. Companies operating in these industries must dedicate extensive resources toward managing risk and ensuring compliance. Here are some examples.
Regulatory Compliance and Recordkeeping Requirements
Companies must verify their customer identity (KYC), maintain accurate records of their activities and keep a record of business communications to demonstrate compliance with applicable laws and regulations. These records include documents related to customer interactions and financial transactions. Regulatory compliance is especially important when reviewing the compliance risk management framework for banks.
Enterprise Compliance Risk Management
Enterprise compliance risk management helps organizations identify and assess risks at the company level. ECRM combines different elements of risk management, such as governance, operational, analytics, and reporting to ensure comprehensive coverage of all areas where risks may exist.
Risk Management and Compliance for Healthcare
Healthcare providers must adhere to various regulations and standards, such as the Sarbanes-Oxley Act (SOX), HIPAA, and GDPR. To ensure compliance with these laws, organizations must have an effective risk management plan that includes policies, procedures, monitoring systems, and reporting mechanisms.
How To Manage Compliance Risk
Organizations must have a comprehensive strategy to ensure they meet their regulatory obligations without compromising operational efficiency or customer service. Corporations operating outside of highly regulated industries might see themselves as exempt, but this is not always the case. For example, all corporations have finance and human resources departments. Both business functions must comply with strict rules regarding recordkeeping and how they interact with workers or customers.
So, what can organizations do to manage these and other forms of compliance risk? Consider the following solutions:
- Train staff on how to recognize and respond to compliance issues.
- Assign someone to track changing laws that affect your organization.
- Work with compliance experts to ensure your organization meets its requirements.
- Take the advice from legal counsel seriously, as it may come back to haunt the organization.
- Lead by example so that workers do not start to see some people as above policies or, in some cases, above the law.
- Automate the archiving of chats to reduce human intervention and potential data tampering.
The Role of Captured and Archived Conversations in Compliance
Chat capturing and archiving are critical elements of an effective compliance risk management program. This provides organizations with a secure and auditable record of all instant messaging communications and helps mitigate the risks associated with non-compliance. When done correctly, it offers organizations more control over their data, which reduces the risk of breaches and unauthorized access. Additionally, some organizations have a legal requirement to archive conversations.
Managing this process manually creates room for error and fraud. Companies can mitigate these risks by automating the process with LeapXpert technology. Book a demo to see how it works.
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