Non-compliance is a constant worry, especially if you work in highly regulated industries such as manufacturing and financial services. As a result many companies invest in compliance risk management to monitor and respond to the risk of non-compliance. It’s a careful balancing act between the regulatory obligations your company faces and the most effective allocation of the resources your compliance program has on hand.
The nature of the risk environment and the compliance demands assumed by a company are always unique to the circumstances. Along with the industry you operate in, you have to consider the region where you reside, the input and output of your operations and much more. If you don’t approach the issue of compliance in a cost-effective and strategic manner, your entire company could pay the price. Unfortunately, compliance risk management programs are not normally known for their affordability.
You Must Understand Your Risk
The first step in risk management is understanding what your risks really are and how they truly reside in your business. As you identify your risks, you’ll find that some will be more likely for your company than others. These risks should be prioritized in your compliance risk management program so that you can respond to them the most aggressively.
Not only will your risk landscape be unique for your company, it can be unique for different departments or groups within it. Your salespeople, for instance, will need to know a lot more about your anti-bribery policy than your engineers who may need to know more about your policy on PPE. This means you’ll need to further tailor your compliance program so that you can approach your risks in a targeted way.
Every company will find their own answers concerning their risk. What everyone has in common is that you have to take steps to understand it, and for that you need a system capable of handling the processes of risk management.
Assess Your Level of Compliance
Once you have identified the risks that threaten your company’s compliance and have a good understanding of what you’re up against, your next step is to learn how tolerant you are for compliance risks. The greater your risk tolerance, the less exacting your compliance policies and procedures will need to be.
The term that compliance officers use to measure risk tolerance is “Acceptable Variation from a Performance Goal”. This mouthful of a phrase essentially describes the difference between actual performance and your benchmark. It’s the acceptable standard you want to achieve when you design policies, procedures and internal controls to respond to a risk. Of course, to properly measure your acceptable variation in performance, you have to have to first have performance goals and a way to assess your acceptable variation.
For example, if your COI policy says that no employee can have a conflict of interest with a competing business, how much variation from that compliance goal will you find acceptable? Should 100% of employees comply with the policy, or would you be satisfied with 95% compliance? If 100% compliance is your goal and your acceptable variation is 0%, then that will require strict internal controls along with a willingness to fire or not hire anyone who violates the policy.
How exactly you assess your risk to find your acceptable variation is up to you. There are many variables to consider such as the size of your company, the risks and regulations you encounter and the resources your program has to put towards risk assessment. It’s common practice now to use a software to facilitate your compliance risk management program, but those can be expensive – easily $200k or more once you customized it to fit the specific needs of your company.
Make the Most of Your Resources With ComplianceBridge®
Compliance risk management is an ongoing, ever shifting process. It’s important to ensure that the compliance processes you have are on pace with your compliance risks. For your company, a manual approach may be fine when your risk of a non-compliance is low, but your environment can quickly change, new management can be hired, new regulations can be created. When your compliance risks increase, you need to be sure that your processes for managing that compliance risk are up to the task.
When you have so much due diligence to do, a manual approach will likely be too overwhelming to be workable. An automated approach may then be much more sensible and effective in the long run. Regardless of your approach, the goal isn’t necessarily to eliminate all your risks forever. That would be impossible. Instead, the goal is to do the best you can with the resources you have.
Unlike other compliance risk management solutions, TotalCompliance® Risk can cost as little as $2,500 and no more than $25k annually for the same functionality you can find on a much bigger, expensive platform. Our software brings you the functionality you need to fuel risk identification, measuring, evaluating, treatment and monitoring – all at an affordable rate.
Build risk assessments quickly in a matter of minutes and use a variety of question types, including multiple choice, risk rating, yes/no and fill-in questions. Weigh certain answers and create conditional questions to give you a more precise analysis, too. Distribution of assessments to the right people only takes a matter of minutes, and then you can start watching the responses come in.
Reminders and notifications keep you and those you’re assessing up to date throughout the process, and analytical and reporting features give you insights into your data down to a granular level. All data you collect with TotalCompliance Risk can be exported for use in audit reports and presentations.
We aren’t claiming that we reinvented the wheel, we simply give you a platform and the tools to hone these risk management activities for yourself. ComplianceBridge just offers it at a fraction of the price of other applications. Don’t spend $200k on compliance risk management.
Instead, request a demo today to see how much functionality $25k can truly get you.