Cyber threats and attacks have been all over the world, and to get into fight or flight every time an attacker throws a breach or any attack at you is too much of a pickle. You'll end up losing your data and money, not to forget- your sanity. You will also have to rebuild your documents and other data. That would take one too many years and millions, and by the time you finish rebuilding all those files and folders, you might come across another attack, and you'll be back to square one.
Fortunately, a wise old man once said, "Better safe than sorry," and that wisdom has been followed for decades and centuries, and we have the world building tools and tech to prevent risks and better news, prevent upcoming ones too.
Another or the same wise old man once said, "Compliance" and the decades or centuries later, we have regulations and frameworks such as GDPR, HIPAA, NIST, ISO, and more. These were designed to ensure organizations maintain measures to keep their resources safe and mitigate any risks.
There's always the risk of not adhering to these compliances, and good news: compliance management plays both the bad cop and good cop in ensuring that organizations adhere to the standards and regulations relevant to their industries.
Let's now break down compliance management. It is the continuous process of ensuring that an organization's operations adhere to legal regulations, industry standards, and the organization's internal policies. The process involves continuously monitoring the organization's functions and practices. Not to forget, continuous assessment and adjustment is also done, aiming to maintain compliance and keep risks and attacks at bay.
We know that the primary reason why compliance management is important is to adhere to legal regulations and industry standards. However, other reasons include maintaining an organization's overall stability, efficiency, and reputation.
Here's a detailed look at why compliance management is crucial for organizations:
Compliance management offers a structured approach to identify, examine, and address potential issues concerning non-compliance and risks. With the enforcement of policies and procedures that align with regulatory and industry requirements, organizations can ensure they function within ethical and legal boundaries.
Speaking of legal boundaries, many aspects of your organization are monitored and audited- internal controls and processes, enforced policies and procedures, employee activities, and more. All the regular monitoring and auditing are done to enable early detection of threats and attacks. This allows for immediate actions to be taken in order to mitigate them. We know it's always good to be safe than sorry.
Apart from that, compliance management systems typically include risk management tools that can assess high-risk areas and allocate the resources to minimize your organization's risk exposure to legal, financial, and reputational implications. You can consider them the compliance cops always on alert to protect your organization.
Compliance management can enhance your organization's operational efficiency through multiple mechanisms such as process automation and centralized information management.
To elaborate, implementing automated systems can streamline routine compliance tasks and this can reduce manual labour and minimize errors. For instance, compliance management systems can aid in preparing audit-ready reports with required evidence and documentation.
Another advantage you can leverage with compliance management here is the centralization of data and activities concerning compliance. Information such as policies, procedures, controls, and compliance documentation are made readily available, thus serving as a single source of truth for all compliance-related data. With all this information in place, your organization can simplify data management and minimize the risk of outdated information and potential errors as well.
When your organization demonstrates its commitment to legal adherence and ethical practices, it also shows its stakeholders that operating within legal and ethical boundaries is highly prioritized. This also reflects on your organization's ability to remain transparent and accountable about its operations. Documentation and audit trails of all activities give stakeholders visibility over the same, and demonstration of being transparent reinforces trust.
With compliance management systems aiding in mitigating risks, organizations show that they are vigilant about proactively identifying and addressing risks and attacks before they get to a high-risk level. All the effort put in here does not fail to build confidence and trust with stakeholders.
Not to mention, consistent adherence to regulations and industry standards elevates an organization's reputation, resulting in building strong trust with stakeholders. This also includes maintaining regular communication and reporting of your organization's compliance status, ensuring that stakeholders remain informed.
We came across the term, "Compliance management system" a few times, and it does sound similar to compliance management. However, they are closely related and different. Here's how:
Compliance management is the overall process of ensuring an organization's adherence to legal regulations and industry standards. Whereas, a compliance management system (CMS) is an integrated system that provides the framework and tools to carry out compliance management in your organization.
To elaborate, a CMS includes policies, procedures, tools, and processes designed to enable an organization to meet its compliance requirements and mitigate risks and threats as well.
A CMS comprises several components that work together to ensure the organization remains compliant with external laws (such as data privacy regulations or financial reporting rules) and internal codes of conduct (such as employee behavior guidelines or environmental sustainability goals). Here's a dissection of the components:
The board of directors and senior management oversee and ensure how effective an organization's CMS is. They do so by demonstrating a clear commitment to compliance from the top of the organization. To elaborate, they adopt and enforce policy statements, appoint qualified compliance officers with appropriate authority, and allocate resources required for compliance functions
The board is responsible for setting the tone for compliance by adopting policy statements, appointing a qualified compliance officer with appropriate authority, and allocating sufficient resources to compliance functions. They need to be up to speed with the effectiveness of the CMS- regularly receive compliance reports, discuss compliance issues, if any, and conduct periodic compliance audits.
On the other hand, senior management, under the board's direction, holds the responsibility for implementing the compliance program. They also keep tabs on compliance expectations being communicated throughout the organization. Their responsibilities also include taking part in compliance training and addressing any concerns regarding compliance.
The compliance program can be considered the heart of an organization's compliance management system(CMS). It includes the policies, procedures, training, monitoring, and reporting mechanisms teaming up to prevent, detect, and rectify compliance violations.
Having a comprehensive set of policies clearly documenting compliance requirements and processes is an important part of maintaining a compliance program. Why? The policies should be easily accessible to all employees and regularly updated according to changes in laws and regulations. Not to mention, they should be reinforced through ongoing training and communication.
Speaking of training, compliance training is pivotal to ensure that employees understand their compliance obligations and are aware of how they are to be implemented at work. The training should be comprehensive, covering all topics relevant to compliance, and tailored according to specific roles and responsibilities of different employee groups. Not to forget, it should regularly be updated to keep up with changing regulations.
Along with the training, monitoring and testing are important to ensure that compliance controls operate effectively and potential issues are addressed timely. This can involve continuously keeping an eye on key compliance indicators, periodic testing of controls, and investigation of potential violations.
A compliance audit is an independent evaluation of an organization's adherence to legal regulations, industry standards, and internal policies. It gives an objective assessment of the organization's stance with respect to compliance with the regulations and standards. It also identifies areas of improvement and provides a view of the same.
The organization's audit function can internally conduct the compliance audit, or a third party can do the same externally. The internal audits are important, keeping in mind the need for continuous monitoring and improvement of the organization's compliance stance. On the other hand, external audits give an independent view of the same and aid in identifying areas of improvement.
Audit findings, including any identified deficiencies, are to be reported to the board of directors and senior management. The organization should accordingly develop and enforce action plans to address any issues and strengthen its compliance program.
