When Your Data is Exposed, is Your Business Covered?
What is compliance?
The short answer is following the federal, state and industry rules for your business. If it were that easy, though, every business would have no problem making sure they stayed on the straight and narrow. In reality, compliance is the government’s and industry leaders’ way of making sure your customers and employers’ personal, digital and financial safety are provided for.
These aren’t guidelines, but enforceable regulations that have the power to detrimentally affect your business operations in four ways: operational, financial, legal or reputational. While some of these overlap – a legal loss may also bring with it a financial and reputational loss – each one of them has the power to cause damage.
Types of compliance risk
Those four types of loss can come from any one of countless regulations, policies or standards set by the federal government, state governments or other industry overseers. Their intent may come from a well-meaning place, but they do put extra strain on businesses trying to grow and succeed in an ever-changing marketplace.
There are nine categories of compliance risk that your business could be subject to:
- Third-party compliance
- Finance and Tax
- Human Resource
- Code of Conduct
Find out how you're business stacks up with our Compliance Risk Assessment.
Ways to mitigate risk
Understand your environment
They say the best defense is a good offense, but to make a successful playbook, you’ve got to know the rules. Each business has its own share of rules it must follow in order to stay in good standing. The first – and most important – step you should take in creating your compliance policies is to understand what is expected of you. Take risk assessments. Read articles. Reach out for a legal consultation. Do everything in your power to make sure you have all the accurate and current information you need to be effective.
Formulate a plan
This is much easier said than done. The plan(s) you make should be completely unique to your environment and your work style. For it to work, you have to make sure employees will follow the steps you put in place, and the easiest way to do that is to incorporate it as seamlessly as possible into their everyday activities.
Even that won’t necessarily guarantee that they’ll follow all the steps – especially if you hand them a 20 page document with technical language explaining the ins and outs of legislation and hides the action items on page 15. Instead create a one or two page document that clearly outlines the steps that need to be taken, who has authority over the steps and the deadlines by which they need to be completed. Make sure to use easy-to-understand language so that your employees can quickly grasp what is expected of them.
Put it into action.
As you start to implement your plan throughout your company make sure that you have documentation that links each procedure or policy to the regulation(s) to which it applies. Not only will this help you get executive and managerial buy-in by showing the risks they are taking in not following your outlined steps, but it also provides an easy way for you to adapt those procedures or policies if the regulations change.
Create an internal compliance team.
Whether these are full-time staff members dedicated solely to ensuring your risk management procedure is followed, or a committee that meets every so often to reevaluate, make sure you have some accountability system in place to guarantee your plan is still functioning as intended and no changes need to be made.
This is a lot of upfront work. No one denies that. But can your business take the risk if you don’t implement a management plan?
Don’t be afraid of leaning on tools to help you create, implement and monitor the policies that are there to safeguard your business’ future. There are a myriad of software applications out there that are designed to do just that.