The regulatory compliance landscape is constantly changing and evolving, with new laws and regulations perpetually being developed. Existing regulations are often modified too, adding yet another element of complexity to the equation. Certain industries and business sectors — namely, the financial sector, the tech sector, manufacturers, and the health care industry — are subject to strict regulatory oversight and the penalties for non-compliance often extend beyond devastating; they’re so significant that they cause companies to close up shop.
Fortunately, there is a solution: compliance management software can be an effective tool for staying up-to-date and responding to the near-constant changes in laws and regulations impacting your organization.
What Are the Consequences of Non-Compliance?
Compliance is a very real and significant part of a well-architected risk management strategy. The reason: non-compliance can result in significant fines, penalties and even negative press which can have a dramatic impact on a company’s public image and profitability. This is particularly true for non-compliance situations involving some of today’s most controversial issues, such as the environment and user data privacy.
Regulatory and legal non-compliance consequences vary dramatically depending upon the exact nature of the violation. Penalties can include some of the following.
- Financial fines – Financial fines and penalties are amongst the most significant penalties that you see for regulatory non-compliance. These fines can be quite significant. For instance, violators of the EU’s General Data Protection Regulation (GDPR) are subject to a fine of up to €20 million or up to 4% of the company’s worldwide turnover for the prior financial year (whichever figure happens to be higher.) That is a tremendous fine that could devastate a company’s financials. What’s more, GDPR applies to any company that has dealings with an EU citizen — even if they’re outside of the EU at the time when the alleged act of non-compliance occurs.
- Remediation – Non-compliance and regulatory violations involving some sort of wrong-doing — especially those involving the environment — commonly entail remediation as one of the consequences. For example, let’s say a manufacturing plant is caught dumping contaminated water into a river. This would constitute a violation of environmental regulations. That business may be required to pay for a clean up operation to reverse the damage that resulted from the contamination.
- Corrective actions – Corrective action is similar to remediation, except it more commonly applies to altering the conditions or circumstances that led to the non-compliance. An example: A warehouse may be cited by OSHA for non-compliance of workplace safety regulations following an injury that occurred in dangerous conditions. OSHA has the authority to order the company to correct those conditions so additional injuries do not occur in the future. OSHA is an example of just one regulatory body with the “teeth” to demand changes of this nature. Some organizations may suggest modifications, but there are a number of regulatory bodies and groups that have the authority to impose fines, penalties and to require corrective action.
- Bad press – While not a formally-imposed penalty, negative press is a very real consequence of non-compliance and it can have a profoundly problematic impact on an organization. Countless companies have found themselves in the headlines following user data breaches, recordkeeping law violations, and incidents involving non-compliance with environmental protection regulations. This can harm the public’s perception of the organization, leading to plummeting stock values and a dwindling customer base. Recovering from negative press can be extremely costly, as it usually requires an aggressive counter-campaign to restore the company’s good name. These public relations campaigns can take many months and they come with a hefty price tag — and there’s no guarantee that you will see success.
With so much at stake, an investment in compliance software will make your business stronger and guarding your company’s interests amidst the ever-changing regulatory landscape.
How Does Compliance Management Software Help Avoid Non-Compliance?
To achieve and maintain compliance, you need to stay up-to-date on all of the laws and regulations that are impacting your organization. You need to know when regulations or laws are modified. You also need to know when new regulations are going into effect so you can implement measures to ensure full compliance.
A well-built regulatory compliance management software platform will include some of the following features and functionalities to help you achieve your objectives.
- A Live Update Feed – Your compliance software platform should have a live feed or dashboard region with industry-specific updates and updates on all of the regulations or laws that apply to your organization. There needs to be some sort of filtering mechanism in place so you are presented with only the most relevant information. A feed is really critical for keeping up with the world’s ever-evolving compliance requirements.
In many industries, you could quite literally make it a full-time job searching out and monitoring the applicable laws and regulations. A feed will automate this process, making it much easier to stay up-to-date on changes and new regulatory requirements.
- Alerts and Notifications – The best compliance software systems provide notifications and alerts when non-compliance is imminent. For example, the health care sector must follow stringent data privacy regulations and certain conditions within an IT infrastructure may constitute a HIPAA violation. Your system can monitor for these conditions, generating an alert when a violation appears to be imminent. This allows the organization to take corrective action before a problem arises.
Some systems can also be configured to send out alerts and notifications when an urgent news item crosses the aforementioned news feed.
- Identification, Tracking, and Response Tools – A good compliance management software system will have a robust toolset for identifying compliance risks and tracking your company’s response to those situations. This is essential for keeping up with the constant changes in compliance regulations and laws. These platforms provide a structured environment for documenting the new or modified regulation, with tools for evaluating the degree of risk and formulating steps for your response.
Formulating a response to regulatory changes is just the beginning. You need to react to those changes in a way that avoids non-compliance. Most compliance management platforms also include project management-type features that allow an organization to assign tasks and track the completion of those tasks. This ensures that nothing is overlooked as your organization responds to changes in regulatory requirements.
A good compliance management software platform can bring a tremendous ROI, especially when you consider the money saved by avoiding the consequences of non-compliance and in terms of the time saved on monitoring the constant changes in compliance requirements. At iTech, our world-class risk management and compliance specialists provide comprehensive solutions to clients in a variety of industries. Contact iTech today to discuss the implementation of a cost-effective compliance management software that will align with your risk management strategy.