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This article is written by Saswata Tewari from the University of Petroleum and Energy Studies Dehradun. This article talks about the different ways in which a company can excel its regulatory compliance programs.

Introduction

Regulatory compliance is an institution’s adherence to the laws, regulations, and guidelines that are relevant to its business operations. Regulatory compliance procedures provide directions to the institutions as they make an effort to achieve their business goals. Breaching any of the directions imposed by the regulatory compliance programs can result in legal punishment including federal fines. Having regulatory compliance programs in an institution requires the management to evaluate their unique requirements and any mandates particular to their industry and then enhance the procedures to meet these requirements.

However, with changing situations and constantly evolving technologies, these regulatory compliance programs must also adapt as per the situation. For instance, the use of mobile phones in the workplace raises compliance concerns as these devices store sensitive and valuable company-related data. Mobile phones with internet connection pose an even bigger threat as it creates compliance vulnerabilities in an organization’s network. It is very important for the institutions to regulate such situations and impose measures to keep these vulnerabilities in check.

Ways to improve regulatory compliance 

Regulatory compliance programs can be improved and developed by equipping an institution with tools and technology that will make the company capable to document everything one needs to satisfy the requirements in regulatory compliance. Some steps need to be followed for making a regulatory compliance program foolproof.

Compliance with governmental laws

Regulatory compliance is an act by an organization to follow the laws and regulations of the land. The purpose of having regulatory compliance for any business institution is to ensure the fact that the business operations are not negatively affecting society and the environment. Therefore, before implementing any regulatory compliance programs, an institution needs to get a thorough knowledge of the type of regulations imposed by the government on businesses. These regulations include :

Government tax

Any government must ascertain the kind of taxes they shall impose on a certain type of business. The point of imposing such a tax is that the community and the people can benefit from the business operations of a company. These taxes include income tax, excise tax, and employment tax.

Employment and labour limitations 

Governments impose regulations on areas concerning labour and workers in general to safeguard their interests. These laws involve wages, work tenure security, and safety in the working environment.

Regulations on advertising

Government regulations regarding advertising ensure that the billboards and posters advertised by a company comply with the regulatory demands presented by the government bodies. The advertisements have to be true and the composition of the products has to be clearly stated in the labels for it to be beneficial for the general public.

Environmental Laws

If the business operations are affecting the overall environment and the operations are not in sync with the existing environmental laws, then the company will be penalized or even can be asked to shut down the business operations.

Licensing

A company has to comply with all the licensing requirements before the company is allowed to operate.

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Thinking for the future

At the starting of any project, it is best to consider the potential regulatory implications beforehand. When implementing any new technologies and solutions, it is very important to ensure that they will be sufficiently flexible to keep up with the regulatory compliances of the company in addition to the newer technologies.

For instance, financial organizations have to make sure that all digital communications are following the regulatory demands both today and in the future. To achieve this, the financial institutions have to build flexibility into their governance strategies for example converting data retention policies into largely automatic operations across various data types and regulatory systems for them to adhere to the shifting global regulations and to avoid penalties, according to a Forbes Insights Report.

Companies have to develop informed positions about how long it will take for them to execute the concepts and how the laws might develop by the time the company shall be ready to take the concepts to the market. Waiting until later can be dangerous as it will mean that people are investing in concepts that cannot be deployed because the regulatory compliances have been shifted.

Also, organizations should be thoughtful about the impact they are going to have on people and communities. It’s crucial to consider the possible effects and impact of the innovations on society and acknowledge the risks and downsides and get knowledge on how to mitigate these risks. 

Using compliance as an advantage

Compliance involves investment but it can also be seen as an opportunity. All the data regarding the information and analysis that has been compiled to meet the regulatory demands, can serve the personal purposes of the company when it is utilized efficiently to refine and enhance the business operations.

Technological innovations can be introduced to enhance regulatory compliance and can be utilized for better business results. For instance, technologies applied for data collection, protection and reporting can help in developing the data accuracy, aid with the single view of the customer, and guide to a better customer experience and faster speed to market. 

According to a study conducted by Forbes Insights, it was said that for certain industries, the question of data quality is wider than being just an establishment for founding a superior customer experience. Complying with the national and international regulations makes it crucial for these industries to get an accurate handle on their customer’s data. 

It takes a lot of effort to make compliance behave in such a manner that it can be productive for the company, but if institutions can find a way to make it balance between the point of effectiveness and efficiency then the compliance program will yield better business results for the company and the cost incurred in these compliance programs will get doubled as an investment in the company’s future.

Avoiding distraction

Compliance is an aspect that can get complex and overwhelming if companies allow it. For instance, several compliance departments are attentively focused on the European Union’s General Data Protection Regulation (GDPR), which was enforced in May 2018. The GDPR brought new data protection regulations and challenges for legal and compliance functions that can seem extremely complex as well as time and effort consuming. This makes many companies feel that they are not ready for meeting such regulatory demands and they get concerned with their ability to report data and give sufficient transparency. It was said in one of the articles, that the emerging impositions brought by the new data protection regulation in the European Union have made some legal and IT institutions panic as organizations have to comply with the most obtrusive technology regulation that was ever made. 

These kinds of problems should not be allowed to restrain the innovations and should be anticipated beforehand when new regulations are being enacted. But operating in a complex regulatory environment should not mean that the executives of a company are neglecting work to improve on data monetization. Companies should continue investing and allocating proper resources to meet the demands of regulatory compliance because these are the goals that the company wants to achieve in the future.

Keeping track of regulatory updates

Business institutions have to keep track of the regulatory data from global as well as regional regulators from various sources such as publications regarding regulations, industry associations, national and local media, and specialized regulation content providers such as LexisNexis, etc. But with so much information from so many sources, it can be cumbersome for organizations to keep track and analyze this regulation content. It can be time and resource-consuming also. 

However, companies can use a cloud-based content platform which can serve as the place where all the data regarding regulatory content coming from various sources can be stored. Compliance professionals can utilize this platform to get access to regulation content based on predefined rules and keywords. Such a tool will also help the institution to set predefined rules on several regulatory attributes which include jurisdiction, industry, state, due date, etc, ensuring that the relevant information reaches the compliance professionals in time.

Standardizing the regulatory taxonomy

Having a regulatory taxonomy in sync with the organizational hierarchy, which is consistent in terms of language, terminology, and structure will enhance the communication among the stakeholders, making it simpler to set up a strong compliance structure. Besides that, it helps the business institutions to categorize, store, and deliver the regulatory updates without having to frequently alter the rules and linkages that have been previously set up in the system.

The company can standardize the taxonomy by setting up a centralized GRC repository to store all the important regulatory updates from across the organization, index updates that are following the organizational hierarchy, and collectively map them to multiple GRC attributes such as risks, controls, policies, etc.

Assigning regulatory responsibilities

To ensure accountability, it is very essential to explain the roles and responsibilities of the persons indulged with the compliance function. When the cloud-based content platform will make sure that all the relevant information reaches the right regulatory professionals, each professional should be an experienced compliance professional who is capable of inspecting these regulatory updates to ascertain whether they are appropriate to the organization. Relevant SMEs need to be recognized within the institution who have thorough knowledge about the regulations and can properly analyze these updates in detail.

Institutions can make sure that there is the first level of evaluation by a centralized regulatory coordinator to ascertain the applicability of the regulatory updates to the institution. The coordinator shall then pass the responsibility on to individual assessors within appropriate departments for thorough impact analysis. At last, collaborating with external stakeholders becomes necessary because the regulators, customers, business partners, and other parties have to be enlightened about any modifications made in the institution’s overall processes, policies, or any other factors.

It is very essential to record these roles and responsibilities of the compliance professionals to establish accountability in the complete business operation. It is also recommended to indulge the senior management actively at each stage and the board of directors should have clear visibility into the whole business process.

                   

Implementing regulatory change

The last step would be to devise action plans, listing out tasks that need to be designated to relevant professionals. Standardized workflows have to be defined for the review and approval processes with advanced capabilities when the tasks become overdue. To make sure nothing goes wrong, it is recommended that the business professionals are notified of the tasks they have been designated from beforehand through emails and reminders.

At each step of the implementation procedure, reports and dashboards should provide the stakeholders’ visibility into the whereabouts of the changes taking place, accountability, and the overall impact on the institution. Besides, institutions should make sure that issues are logged with defined restoration plans for fast and effective issue resolution and closure.

To achieve all these steps quickly, institutions can choose for a robust and extensive regulatory change management solution, which will not only track and analyze all the frequently made regulatory changes but also will make sure that the regulatory changes are successfully and professionally implemented.

Conclusion 

Every responsible business institution must comply with all the regulations imposed by the government and other relevant regulatory bodies. These regulations are needed to ensure that the business operations will have no bad effects on the environment and the people in the society.

The laws and policies imposed by the Government are always changing depending on the changes in the business. Every business institution needs to think smartly about the requirements of their software. Business institutions need to make sure that their software can adapt to any changes that may occur now or in the future. Also, it is crucial for business institutions to know that the research data required to meet the regulatory demands can be utilized for up-gradation of the current system of the business.

Regulatory compliances also ensure that the business institution has paid the financial obligations to the government i.e taxes. Not complying with the regulations imposed by the government can result in legal penalties to the business or can even result in the closure of the business.

References


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