Introduction
Compliance management is getting more challenging. Not only are legislators and governments around the world imposing more regulations, but the expectations placed on compliance leadership to manage an expanding scope of compliance oversight is growing every day. The periphery of regulatory and corporate compliance – including ethics, diversity, ESG, and risk management – asks ever more of compliance leaders who are seeking to best manage, scale, and address compliance demands efficiently and effectively.
In this article, we will discuss various aspects of compliance management, best practices, and more.
Key Takeaways
- A robust compliance program does more than just align an organization to the letter of the law or specific legal requirements. It has the capacity to demonstrate that an organization is well-run, ethical, and can be trusted by its employees, customers, partners, community, and regulators.
- When compliance programs are seen beyond the specifics of a regulation and reflect an organization’s commitment to responsible business practices, ethical cultures, and organizational integrity, they become a vehicle for sustained growth and profitability.
- Purpose-built compliance management systems help businesses ensure efficient and effective compliance, stay on top of regulatory updates, and drive policy and procedure alignment for identifying, prioritizing, investigating, and addressing compliance vulnerabilities and violations before they morph into broader or destructive events.
- Compliance management best practices include measures such as a proactive approach to managing compliance and ethics, a risk-based approach to compliance, training employees, defining an ethical profile, and integrating hotlines.
What is Compliance Management?
Compliance management is the process of monitoring and assessing an organization’s systems to ensure they are in line with industry standards and regulations. Effective compliance management can help organizations avoid fines, protect their reputation, and reduce legal risks.
Holistically, an organization’s compliance management program helps facilitate and represent the organization’s workplace culture, values, and reputation, as well as its broad business risks. Noncompliance and its potential to harm relationships with employees, partners, customers, and the market is a significant risk that should be viewed within the scope of an organization’s risk management approach. And as part of a broader GRC program, with deep connections across governance, risk management, and compliance, program leaders can gain unprecedented risk visibility, reporting, and actionability. In an increasingly volatile world, best practices necessitate increased data sharing, centralized management, and program performance measures and accountability.
Nearly half of the survey respondents--44%--identified compliance assessments, control testing, and policy and process updates as the main compliance management challenges they are facing.
What is the Need for Compliance Management
Any business that seeks to assure buyers, investors, partners, and employees of its legitimacy and integrity should have a demonstrable compliance program that’s aligned to and current with regulations and expectations. An effective compliance management program enables organizations to:
- Determine potential compliance risks
- Identify pathways to manage and mitigate these risks
- Define future compliance needs and courses of action.
The most efficient means to ensure alignment with regulatory requirements, policy updates, employee attestations, and reductions in potential compliance gaps or violations is the acquisition and application of purpose-built compliance management system.
What are the Challenges of Compliance Management?
Here are some of the top challenges faced by organizations in managing compliance effectively:
Siloed and Disjointed Processes
A siloed approach, such as creating a compliance process specifically for one regulation or industry standard, for instance, will inevitably lead to a highly convoluted compliance management program with duplicate and redundant controls, a lack of visibility and transparency, and an inability to access the data for actionable insights. Additionally, this approach could also result in inefficiencies and duplication of effort with little or no collaboration across business lines, locations, or departments.
Manual Approach
Reliance on manual tools and processes, such as spreadsheets, emails, documents, and shared files, is no longer effective in navigating today’s fast-evolving regulatory landscape. It inundates already overwhelmed compliance teams with tasks such as monitoring the regulatory horizon for updates, manually collating data, performing control testing, etc., taking their focus away from other core compliance management activities such as proactively mitigating control gaps and weakness, understanding the impact of a regulatory update on the organization, etc.
Data Integrity and Consistency
In today’s digitized era, a successful compliance management program is highly dependent on the integrity and consistency of the underlying data. However, various factors such as a lack of common taxonomy, standardized processes, and disparate systems, make it difficult to not only aggregate and normalize data for further analysis but also ensure its integrity and completeness.
Lack of Visibility
In-depth and 360-degree visibility into compliance-related activities and processes is essential for an effective compliance management program. It is important to enable an organization to proactively identfy and address gaps and issues before they snowball into a bigger problem. However, a manual and siloed approach to compliance management can impede this visibility, resulting in blind spots.
Five Best Practices for Prioritizing and Building an Effective Compliance Management Program
With a rapidly evolving regulatory environment, multiple technology options, and sometimes contrasting enforcement agency guidelines, it is important to define best practices and steps to ensure they are put in place. Here are the best practices for building an effective compliance management program:
Be Proactive in Managing Compliance and Ethics
An organization’s readiness to handle compliance issues is critical as it may impact organizational strategies, employee morale and retention, reputation, brand value, and profitability. To that end, successful businesses need to be proactive in terms of establishing compliance controls and processes, defining accountability, and centrally managing compliance programs so they are easily accessible to all stakeholders.
Being proactive requires compliance professionals to collaborate with other departments – risk management, legal, HR, and audit – to best manage compliance processes, controls, templates, and timelines. This approach gives the compliance team comprehensive visibility into organizational compliance performance and requirements, so they can perform regular or ad- hoc assessments to minimize violations and enforcement actions.
Adopt and Communicate an Ethical Profile
An ethical workplace culture with defined standards and expectations helps an organization operate effectively and efficiently. The foundation of an effective ethics and compliance management program is a strong and well-communicated code of conduct, which may most closely represent organizational standards, values, and culture through core policies, procedures, and behavioral expectations.
When the organization has multiple subsidiaries or third parties spread across divisions and geographies, code and policy development should consider local cultures, customs, and sensitivities to ensure applicability and commitment. This helps minimize gaps or loopholes in compliance practices. Automated tools can add further value by simplifying the process of policy development, approval, distribution, attestation, and management
Train Employees on Compliance Policies
Organizations cannot fully comply with regulations if their employees do not follow organizational policies and procedures. Investing in employee training as regulatory changes and policy updates necessitate is a best practice. Employees need to understand and commit to the organization’s culture and its ethical boundaries, and depending on specific roles and locations, to additional compliance requirements.
Technology plays an important role in the creation, legal alignment, learning management systems, tracking, and validation of ethics and compliance training. Many organizations must deliver multiple compliance training courses to align with applicable regulations.
Integrate Hotlines with the Compliance Program
Many organizations have made whistleblower hotlines available to employees to enable them to report ethical and compliance concerns, including unethical behaviors, harassment, corruption, fraud, discrimination, and other episodes of misconduct. In the United States, any publicly traded company is required to have a hotline in place, as well as the compliance management tools necessary to manage investigations, review and close cases, and transparently demonstrate ethical and equitable enforcement.
Most hotlines enable anonymous reporting and follow-up, along with the means to triangulate reporting and data. Integrating hotlines with the company’s compliance program is a best practice – even where it’s not legally required – to help identify and manage conduct issues, as well as to assure employees of a responsive and non-retaliatory approach to hotline reporting.
Adopt a Risk-Based Approach to Compliance Management
A risk-based approach to compliance and ethics management involves identifying, scoring, and surfacing high-priority risks within the organization. As a best practice, risk-based compliance programs enable organizations to capture, consolidate, and centralize risk management based on standards, controls, and measures.
By applying a risk-based approach across the business, GRC professionals can both showcase best practices in spotlighting the most severe compliance risks from across the business and demonstrate actions taken to actively reduce issues, violations, investigations, and fines. Based on the risk rating, organizations can effectively plan control testing, protect the organization from compliance risks, and ensure program defensibility.
The Role of Technology in Compliance Management
Few organizations can comply with rules and regulations overnight while adapting to a continuous stream of new regulations. Compliance is a mix of science and art, with obligations to align an organization to a dynamic and complex regulatory environment and an ability to define and enact policies and procedures that ensure a positive culture of ethics and compliance.
By leveraging solutions built to streamline regulatory adaptation, policy development, training and issue management, an organization can deliver exceptional compliance programs that can express its values and commitment to ethics into its reputation, market, community, and regulatory environment. A strong compliance program is a strategic investment that pays both qualitative and quantitative dividends. This is the goal of well-run programs.
Compliance Management Case Study
A leading Latin American online marketplace software provider with operations in 18 countries and territories across 3000+ official stores, required the right compliance solution to scale their fast-expanding business needs.
With MetricStream Compliance Management products within our BusinessGRC suite, the company is now successfully improving efficiencies on overall compliance workflows across locations. The costly and time-consuming manual data collation and aggregation in policy and procedure management, compliance assessments, and control testing have been eliminated. With the automation of issue identification, tracking, and reporting processes, the company is experiencing accuracy in management reporting.
Streamline Compliance Management with MetricStream
MetricStream’s Regulatory Compliance Management products equip your organization to effectively manage regulatory compliance management requirements. Save time, costs, and resources with automated workflow, collaboration, and real-time reporting capabilities. Establish a centralized framework and map regulations, risks, controls, and issues to the respective business functions, locations, and legal entities. Empower your senior executives with comprehensive visibility into compliance processes, enabling them to stay on top of regulatory obligations.
Take a comprehensive approach to Regulatory Compliance Management with:
FAQ
What is the objective of compliance management?
Compliance management aims to ensure that an organization is operating in compliance with all relevant regulatory requirements and standards.
What is the purpose of the compliance management system?
The purpose of a compliance management system is to improve the efficiency of compliance management processes by automating repeatable tasks and provide actionable insights in real time for improved decision-making.
Compliance management is getting more challenging. Not only are legislators and governments around the world imposing more regulations, but the expectations placed on compliance leadership to manage an expanding scope of compliance oversight is growing every day. The periphery of regulatory and corporate compliance – including ethics, diversity, ESG, and risk management – asks ever more of compliance leaders who are seeking to best manage, scale, and address compliance demands efficiently and effectively.
In this article, we will discuss various aspects of compliance management, best practices, and more.
Key Takeaways
- A robust compliance program does more than just align an organization to the letter of the law or specific legal requirements. It has the capacity to demonstrate that an organization is well-run, ethical, and can be trusted by its employees, customers, partners, community, and regulators.
- When compliance programs are seen beyond the specifics of a regulation and reflect an organization’s commitment to responsible business practices, ethical cultures, and organizational integrity, they become a vehicle for sustained growth and profitability.
- Purpose-built compliance management systems help businesses ensure efficient and effective compliance, stay on top of regulatory updates, and drive policy and procedure alignment for identifying, prioritizing, investigating, and addressing compliance vulnerabilities and violations before they morph into broader or destructive events.
- Compliance management best practices include measures such as a proactive approach to managing compliance and ethics, a risk-based approach to compliance, training employees, defining an ethical profile, and integrating hotlines.
What is Compliance Management?
Compliance management is the process of monitoring and assessing an organization’s systems to ensure they are in line with industry standards and regulations. Effective compliance management can help organizations avoid fines, protect their reputation, and reduce legal risks.
Holistically, an organization’s compliance management program helps facilitate and represent the organization’s workplace culture, values, and reputation, as well as its broad business risks. Noncompliance and its potential to harm relationships with employees, partners, customers, and the market is a significant risk that should be viewed within the scope of an organization’s risk management approach. And as part of a broader GRC program, with deep connections across governance, risk management, and compliance, program leaders can gain unprecedented risk visibility, reporting, and actionability. In an increasingly volatile world, best practices necessitate increased data sharing, centralized management, and program performance measures and accountability.
Nearly half of the survey respondents--44%--identified compliance assessments, control testing, and policy and process updates as the main compliance management challenges they are facing.
Any business that seeks to assure buyers, investors, partners, and employees of its legitimacy and integrity should have a demonstrable compliance program that’s aligned to and current with regulations and expectations. An effective compliance management program enables organizations to:
- Determine potential compliance risks
- Identify pathways to manage and mitigate these risks
- Define future compliance needs and courses of action.
The most efficient means to ensure alignment with regulatory requirements, policy updates, employee attestations, and reductions in potential compliance gaps or violations is the acquisition and application of purpose-built compliance management system.
Here are some of the top challenges faced by organizations in managing compliance effectively:
Siloed and Disjointed Processes
A siloed approach, such as creating a compliance process specifically for one regulation or industry standard, for instance, will inevitably lead to a highly convoluted compliance management program with duplicate and redundant controls, a lack of visibility and transparency, and an inability to access the data for actionable insights. Additionally, this approach could also result in inefficiencies and duplication of effort with little or no collaboration across business lines, locations, or departments.
Manual Approach
Reliance on manual tools and processes, such as spreadsheets, emails, documents, and shared files, is no longer effective in navigating today’s fast-evolving regulatory landscape. It inundates already overwhelmed compliance teams with tasks such as monitoring the regulatory horizon for updates, manually collating data, performing control testing, etc., taking their focus away from other core compliance management activities such as proactively mitigating control gaps and weakness, understanding the impact of a regulatory update on the organization, etc.
Data Integrity and Consistency
In today’s digitized era, a successful compliance management program is highly dependent on the integrity and consistency of the underlying data. However, various factors such as a lack of common taxonomy, standardized processes, and disparate systems, make it difficult to not only aggregate and normalize data for further analysis but also ensure its integrity and completeness.
Lack of Visibility
In-depth and 360-degree visibility into compliance-related activities and processes is essential for an effective compliance management program. It is important to enable an organization to proactively identfy and address gaps and issues before they snowball into a bigger problem. However, a manual and siloed approach to compliance management can impede this visibility, resulting in blind spots.
With a rapidly evolving regulatory environment, multiple technology options, and sometimes contrasting enforcement agency guidelines, it is important to define best practices and steps to ensure they are put in place. Here are the best practices for building an effective compliance management program:
Be Proactive in Managing Compliance and Ethics
An organization’s readiness to handle compliance issues is critical as it may impact organizational strategies, employee morale and retention, reputation, brand value, and profitability. To that end, successful businesses need to be proactive in terms of establishing compliance controls and processes, defining accountability, and centrally managing compliance programs so they are easily accessible to all stakeholders.
Being proactive requires compliance professionals to collaborate with other departments – risk management, legal, HR, and audit – to best manage compliance processes, controls, templates, and timelines. This approach gives the compliance team comprehensive visibility into organizational compliance performance and requirements, so they can perform regular or ad- hoc assessments to minimize violations and enforcement actions.
Adopt and Communicate an Ethical Profile
An ethical workplace culture with defined standards and expectations helps an organization operate effectively and efficiently. The foundation of an effective ethics and compliance management program is a strong and well-communicated code of conduct, which may most closely represent organizational standards, values, and culture through core policies, procedures, and behavioral expectations.
When the organization has multiple subsidiaries or third parties spread across divisions and geographies, code and policy development should consider local cultures, customs, and sensitivities to ensure applicability and commitment. This helps minimize gaps or loopholes in compliance practices. Automated tools can add further value by simplifying the process of policy development, approval, distribution, attestation, and management
Train Employees on Compliance Policies
Organizations cannot fully comply with regulations if their employees do not follow organizational policies and procedures. Investing in employee training as regulatory changes and policy updates necessitate is a best practice. Employees need to understand and commit to the organization’s culture and its ethical boundaries, and depending on specific roles and locations, to additional compliance requirements.
Technology plays an important role in the creation, legal alignment, learning management systems, tracking, and validation of ethics and compliance training. Many organizations must deliver multiple compliance training courses to align with applicable regulations.
Integrate Hotlines with the Compliance Program
Many organizations have made whistleblower hotlines available to employees to enable them to report ethical and compliance concerns, including unethical behaviors, harassment, corruption, fraud, discrimination, and other episodes of misconduct. In the United States, any publicly traded company is required to have a hotline in place, as well as the compliance management tools necessary to manage investigations, review and close cases, and transparently demonstrate ethical and equitable enforcement.
Most hotlines enable anonymous reporting and follow-up, along with the means to triangulate reporting and data. Integrating hotlines with the company’s compliance program is a best practice – even where it’s not legally required – to help identify and manage conduct issues, as well as to assure employees of a responsive and non-retaliatory approach to hotline reporting.
Adopt a Risk-Based Approach to Compliance Management
A risk-based approach to compliance and ethics management involves identifying, scoring, and surfacing high-priority risks within the organization. As a best practice, risk-based compliance programs enable organizations to capture, consolidate, and centralize risk management based on standards, controls, and measures.
By applying a risk-based approach across the business, GRC professionals can both showcase best practices in spotlighting the most severe compliance risks from across the business and demonstrate actions taken to actively reduce issues, violations, investigations, and fines. Based on the risk rating, organizations can effectively plan control testing, protect the organization from compliance risks, and ensure program defensibility.
Few organizations can comply with rules and regulations overnight while adapting to a continuous stream of new regulations. Compliance is a mix of science and art, with obligations to align an organization to a dynamic and complex regulatory environment and an ability to define and enact policies and procedures that ensure a positive culture of ethics and compliance.
By leveraging solutions built to streamline regulatory adaptation, policy development, training and issue management, an organization can deliver exceptional compliance programs that can express its values and commitment to ethics into its reputation, market, community, and regulatory environment. A strong compliance program is a strategic investment that pays both qualitative and quantitative dividends. This is the goal of well-run programs.
Compliance Management Case Study
A leading Latin American online marketplace software provider with operations in 18 countries and territories across 3000+ official stores, required the right compliance solution to scale their fast-expanding business needs.
With MetricStream Compliance Management products within our BusinessGRC suite, the company is now successfully improving efficiencies on overall compliance workflows across locations. The costly and time-consuming manual data collation and aggregation in policy and procedure management, compliance assessments, and control testing have been eliminated. With the automation of issue identification, tracking, and reporting processes, the company is experiencing accuracy in management reporting.
Streamline Compliance Management with MetricStream
MetricStream’s Regulatory Compliance Management products equip your organization to effectively manage regulatory compliance management requirements. Save time, costs, and resources with automated workflow, collaboration, and real-time reporting capabilities. Establish a centralized framework and map regulations, risks, controls, and issues to the respective business functions, locations, and legal entities. Empower your senior executives with comprehensive visibility into compliance processes, enabling them to stay on top of regulatory obligations.
Take a comprehensive approach to Regulatory Compliance Management with:
What is the objective of compliance management?
Compliance management aims to ensure that an organization is operating in compliance with all relevant regulatory requirements and standards.
What is the purpose of the compliance management system?
The purpose of a compliance management system is to improve the efficiency of compliance management processes by automating repeatable tasks and provide actionable insights in real time for improved decision-making.
