Recent years have seen a significant rise in the number of regulations that are being issued and enforced by both private and government regulatory organizations. From environmental regulations and personal privacy protections to rules governing how documents and records are handled, these regulations have a broad impact. In fact, virtually every agency is subject to regulatory oversight in some way, shape, or form. But many don’t even realize their compliance burdens, resulting in a significant risk factor — one that is commonly overlooked in an organization’s risk management strategy.
A compliance consulting agency can serve as an agency’s greatest ally in an effort to achieve long-term regulatory compliance. But how, exactly, does a compliance consulting agency help you to avoid compliance risks?
Compliance and its Position in the Risk Management Landscape
Before we examine the role of a compliance consulting agency, let’s take a moment to understand how compliance fits into the risk management sphere.
Risk management has become an increasingly prominent business strategy component, in large part due to the COVID-19 pandemic. The pandemic revealed the true fragility of many companies, while simultaneously emphasizing the importance of a strong, proactive risk management strategy.
Compliance is a key risk factor and a major element of risk management, particularly for companies in highly-regulated industries such as health care, finance, and manufacturing. Compliance — or, more accurately, non-compliance — represents a significant risk factor for a business because the potential losses and consequences can be very impactful. Legal and regulatory non-compliance cases can lead to some of the following effects.
- Monetary fines — some totaling millions of dollars – are commonly issued as a penalty for non-compliance. Some of these fines are so significant that they can cause an agency to go bankrupt.
- An agency may be ordered to pay for remediation, repairs, or for some other measures designed to reverse or correct a condition that was associated with the non-compliance incident.
- Bad press and controversy can change the public’s view of an agency or brand, resulting in irreparable damage that can adversely impact profitability.
- Legal violations can result in consequences such as fines and even jail time for individuals who are involved.
Many industry-specific regulations are imposed by prominent organizations within that industry. These industry-specific regulatory bodies often issue penalties that affect an agency’s participation in future organization-hosted events. For example, a non-compliance incident could lead to an agency being banned from participating in the organization’s events for a period of several years. Their membership may also be suspended — something that can be problematic if membership is regarded as a sign of a reputable business within that particular industry.
Non-compliance carries many potential consequences — some of which hold the potential to close doors, both literally and figuratively. This underscores the importance of risk mitigation and that is precisely where a compliance consultant can lead the way.
Correcting and avoiding compliance risks is perhaps best achieved with a compliance consulting agency. That’s because they have refined the risk mitigation processes and understand the unique industry-specific challenges that face many businesses.
Non-Compliance and the Role of a Compliance Consulting agency
Yes, your organization is expected to adhere to all applicable laws and regulations — including the ones that you didn’t even know existed. It’s a scary thought, especially when you consider the aforementioned consequences.
The reality is that in the regulatory world, compliance is non-negotiable and expected. Ignorance of a particular regulation or law doesn’t serve as a valid excuse. This means that an organization may be completely broadsided when they’re contacted regarding a situation that involves their non-compliance.
Enter: the compliance consultant. A consultant will play a vital role in risk mitigation by performing a few key tasks. In short, this is the key to avoiding compliance risks with a compliance consulting agency’s help and guidance.
Risk Evaluation – The consultant will perform an in-depth evaluation of the applicable laws and regulations that are applicable to your business. Each one is a risk factor since each law or regulation carries the potential for some adverse consequence. It is important that all compliance burdens are identified because you cannot take measures to ensure compliance if you are unaware that a particular regulation exists.
Compliance Evaluation – Once all of the applicable laws and regulations are identified, the consultant will evaluate the agency’s operations, processes, protocols, policies and procedures to determine if and how they are complying with the laws and regulations. The consultant will also be looking to determine if there is a gap between the stated policies and procedures and what is actually occurring within the business. This step will lead to the development of a detailed list of non-compliance incidents — risk factors that will guide the plan for risk remediation.
Compliance Risk Remediation Planning – The consultant will develop an action plan for risk remediation for each risk factor that was identified in the compliance evaluation. The regulation and the actions required to achieve compliance will be outlined. Then, a step-by-step plan will be developed with clear descriptions of who will be involved and what actions must be taken, and when.
The plan is then put into action and progress is closely tracked to ensure success. In many cases, risk management software such as governance, risk, and compliance software systems (aka GRC software or simply, risk management software).
Compliance Monitoring – Compliance monitoring is essential because you need to know that your risk mitigation efforts have succeeded. Many risk management software platforms include project management-type tools that allow you to assign tasks, monitor progress and collaborate. This way, you can proactively manage the risk mitigation efforts as you strive to achieve compliance.
In addition, you can monitor the law and regulation landscape, with many software systems including feeds with information on new/updated laws and regulations that could affect your agency. Some find that these platforms are worth the money and time investment just for these feeds alone since the process of manually monitoring for regulatory changes can be tremendously time-consuming.
This is an example of how the right technology, when paired with the talents of a compliance consulting agency, can be very effective for avoiding compliance risks. Once you’ve found the perfect compliance consultant, it’s time to identify the best risk management software technology. That is where iTech can help. Risk management is one of our specialties here at iTech. We develop innovative enterprise risk management solutions, from GRC software to more specialized risk management software platforms. Contact the team at iTech and let’s get started on creating technology to help you manage, monitor, and mitigate compliance risks, threats, and vulnerabilities.