A massive component of owning or running an organisation is making sure it is in compliance with external and internal regulations and policies in order to protect it from the risks caused by non-compliance. Compliance risk management is the process of understanding and managing compliance with laws and regulations and helping to better manage the risks associated with non-compliance.
Not only does managing your organisation's compliance risk ensure you avoid financial and legal implications, but it also builds trust and credibility among your employees and other stakeholders and can even enhance your brand reputation if you choose to comply with voluntary regulations, like some related to environmental sustainability, for example.
Knowing and comprehending your external and internal compliance obligations and the risks involved can be overwhelming, so it is critical to put a process in place to give you the peace of mind you are effectively managing your compliance and steering clear of potential liabilities.
Here are some steps to ensure compliance effectively:
Step 1: Put a framework in place to identify your obligations.
The first step is building a framework that ensures your organisation properly identifies and understands its duties, obligations and liabilities towards the government as well as employees, investors or any third party partners. This includes implementing a cadence for checking for new or updated compliance obligations your organisation may need to accommodate. Software like RiskWare's Compliance Module can be incredibly helpful here as it enables you to determine and organise the legislation, regulations or internal policies you must comply with, in one place.
Step 2: Conduct a risk assessment.
Once you know your organisation's compliance obligations, you should conduct a risk assessment to identify how the compliance obligations, if not followed, could put your organisation at risk. In other words, you'll want to assess the threat imposed on your organisation if you don't abide by a particular standard. As part of this process, you will be able to prioritise your compliance efforts and allocate resources accordingly.
Step 3: Incorporate policies & procedures to ensure compliance is met.
For any organisation, it is of utmost importance that you safeguard your compliance efforts by creating policies and procedures, including any necessary contracts, that make sure you are meeting your obligations in a timely manner. Part of this step should be assigning ownership and responsibility to specific employees or teams to stay on top of the standards you need to comply with and also to plan and be prepared for any potential risks involved.
Step 4: Report on your compliance risk management efforts.
As with any management process, it's important to regularly report on your organisation's compliance environment. You'll want to review that your obligations are being met as well as the processes and procedures put in place for meeting them to identify what's working or any inefficiencies that can be adjusted. Likewise, you'll want to keep a record of your compliance history for the purpose of internal or external audits. A tool like RiskWare's Compliance Module can create customised reports on your compliance progress and history.
Managing compliance isn't a one-off project, but rather an ongoing operation, so developing a standardised system following the steps above will allow your organisation to continuously meet your compliance obligations and even explore voluntary standards that could improve your business practices.
For a more thorough understanding of compliance management and why it's important, read our recent blog "What is Compliance Management?"
To learn more about how RiskWare is making the world a little less risky, visit us at RiskWare.com.au.