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The Importance of Regulatory Compliance

Published on 09 March 18
Regulatory compliance isn't the most exciting topic in the world, but it is one of the most important for your business. Following the correct procedures and paying strict attention to detail can have a variety of benefits for your organization.

Of course, financial protections are one of the key benefits of regulatory compliance, as non-compliance often comes with hefty fees and penalties. Following regulations also provides your company with valuable guidance as to how to approach common business practices. Finally, regulatory compliance instills confidence in your customers that your business is committed to their protection.

What Is Regulatory Compliance?
Click toIn 2002, the Sarbanes-Oxley Act established the guidelines businesses must follow when documenting their financial compliance. The act also named the Securities and Exchange Commission (SEC) as the authority in charge of enforcing this compliance.

Federal and state governments establish the regulations that businesses must comply with, and a variety of government agencies, including the SEC, enforce them. These agencies are not just responsible for ensuring compliance, but also providing companies with the resources and assistance they need to be successful in meeting the necessary requirements.

Risk Management and Compliance Management Go Hand-in-Hand
No compliance program is complete without an element of risk management. Companies must take the time to assess the specific risks their organization might face so that they can develop a plan to mitigate potential dangers. For example, if your organization does not handle or maintain personal information on your customers, you may not need as stringent data encryption as a company that processes credit cards, social security numbers and other sensitive data on a regular basis. However, it is crucial that you continuously reevaluate your business's needs as it grows and evolves to ensure your practices are still adequate.

In general, large corporations have more difficulty meeting regulatory requirements than smaller companies do, as the risks are more extensive. For larger businesses, compliance consultants can help establish the necessary protections and business practices to stay in compliance with all necessary regulations.

Protecting Your Organization
So many companies neglect to prepare for security incidents because they believe the risk is minimal. However, this line of thinking sets your business up for disaster as you scramble to recover when a security breach does happen. It is far better to be overly prepared than not prepared enough. When your company does experience a security issue, it is already too late to enact security protocols, so it is best to have these protections in place, even if you never need to actually use them.
The more sensitive data your company stores, the greater the risk of security attacks. For example, financial and healthcare industries are far more at-risk because they maintain large amounts of personal information with regards to their clientele. At the other end of the spectrum, non-profits and small businesses do not find themselves the subject of data breaches as frequently.

Even if you believe your business to be low-risk, that doesn't mean that you should skimp on security. The more vulnerabilities in your organization's security, the easier a target your company will be for hackers and data thieves. While it may seem like an attractive option to conserve your company's limited resources by minimizing security protocols, this could end up costing your company even more in the long run when you start to lose customers to your more-secure competitors.

Increasing Profitability
With more and more malicious attacks making the headlines these days, customers are becoming increasingly concerned with data protection, actively seeking out companies that maximize data security. If your business isn't keeping up with this trend, you'll risk losing the customers you have worked so hard to gain, potentially diminishing your company's profits in the process. It is much harder to come back from a data breach than it is to prevent it from happening in the first place.

Creating detailed audit reports to prove that your organization is in compliance with security regulations can go a long way towards instilling confidence in your clients. Showing that you are safeguarding your customers' data will help with customer retention, keeping your business profitable.

Leveraging Compliance Management Software
Compiling compliance documentation is no easy task and takes your team away from their core job duties. This task requires multiple departments across your organization to work in tandem, which necessitates accurate communication, activity tracking and consistency.

Managing all of this can be quite difficult, especially if you are not well-versed in regulatory compliance law. If your company gets audited for compliance, you'll need to provide all requested documentation to prove your company's compliance to avoid legal complications, fees and other penalties, and even company shutdowns.

Utilizing compliance management software can streamline the process and help your organization stay on top of the necessary compliance tasks and regulations. Compliance software keeps all relevant information in a single platform, minimizing the risk of discrepancies come audit time. Human error is always a factor in creating your own compliance documentation, and this type of software serves to prevent those issues, identifying any discrepancies you may not have been able to catch on your own.

Although compliance management may not be your preferred area of business, your organization cannot survive or thrive without it, so take the time to seriously examine the vulnerabilities in your organization. With proper preparation and consistent management, you can protect your company and your customers from malicious threats.

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