A strong compliance program is essential to your business’s success. It requires dedicated officers on staff, but the C-suite must play an integral role in helping safeguard against misconduct at the top.
Below are five critical things that top business leaders must understand when it comes to compliance.
1. Compliance provides a more accurate cost analysis
By undertaking a comprehensive analysis that incorporates compliance-related costs, you can assertain real business value. The initial analysis typically does not take into account the third party-related expenses of due diligence, ongoing monitoring and a possible compliance failure.
When these expenses are factored in, the business receives a more accurate view of the cost of working with that third party before a contract is signed. This can help the business save real money if it is determined in advance that the cost outweighs the benefit of the third party.
2. Non-compliance fees and fines cost you more than money
You will be handed down penalties for bribery and accounting violations. And few are the customers who are excited about working with lawbreakers. Instead, they want to know their information is protected and that they are doing business with companies practicing legally and ethically.
So then, violations turn customers away. That makes it hard for a company to recover its reputation, as there are no new customers to vouch for the trustworthiness of your business. The damage to brand reputation can often cost even more than those fines.
3. Compliance gives you a competitive edge
One ethical misstep can lead to ruin for your business in today’s activist, social media-fuelled culture. But the flip side is that compliance with regulation and ethics can serve as a differentiator from your competitors. Bosses need to ensure third parties aren’t going to get them in trouble. And as a third party, being able to demonstrate compliance can help land that deal.
A strong compliance program thoroughly vets partners, which reduces business risk. This then empowers new revenue streams in new markets.
4. A haphazard approach to compliance is expensive
The C-suite may balk initially at the startup cost of the personnel and advanced technology for a robust compliance team, but it will end up costing less than the fines, fees and damage to brand reputation.
Compliance is often very complicated, especially when grappling with regulations set by multiple countries. This is why having an organised and systematic approach is essential. It will ensure that nothing falls through the cracks and that there is total visibility at all times.
Compliance monitoring activity, as well as communication and training activities, are supported by this systematic technology approach. You can then take advantage of the ubiquity of mobile devices to deliver ongoing training, alerts and reminders.
Additionally, you can receive significant benefit from data analytics. This analysis can, among other things, help predict future compliance issues, improve the efficiency of compliance testing and conduct real-time monitoring of high-risk areas.
Daren Howell, business continuity expert at Sungard Availability Services, looks at how businesses are extremely relaxed or dangerously unaware of the changing responsibilities and liabilities around compliance.
5. It is essential to have a compliance officer on staff
The skills required for compliance cannot be performed by just anyone. It is a highly specialised arena, requiring time, effort, investment and a thorough programmatic approach. Your professional compliance officer must understand the various nuances that can ultimately protect your company.
Your head of compliance needs to be involved in strategic business decisions in order for your organisation to take full advantage of this expertise. This individual will need to understand and speak the language of business. Then they will be able to embrace the critical nature of compliance and provide the buy-in that then trickles down through all levels of the business.
The hidden power of compliance
With all the intricacies of business to manage, compliance seems to many leaders like an additional burden they wish they didn’t have to deal with – or budget for. But this attitude doesn’t fully understand the cost-cutting and revenue-generating potential of a strong compliance program.
This will align company ethics and values with regulations and, if matched with executive buy-in, flow throughout the organisation for a consistent perspective that protects reputation. Compliance officers today can be trusted business advisors, pointing out risk and the true likely cost of partnering with third parties.
In the global marketplace, compliance is not just the cost of doing business but integral to its success.
Thomas Sehested is the CEO and co-founder of GAN Integrity. He is an entrepreneur who specialises in building disruptive business-to-business technology companies.
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