Co-authored by Shilpa Shingade
A quick fact for you.
The average cost for organizations that experience non-compliance problems is $14.82 million, a 45% increase from 2011!
In recent years, adhering to the laws and standards, and monitoring the compliance of business processes has evolved as a major concern for business owners. Staying compliant with ever-evolving regulations has become an ‘obvious’ business imperative and failing to adhere to these regulations can put organizations in a fix. Before we dive into the risks of falling into the ‘non-compliant’ dungeon, let’s understand what corporate compliance is.
What is Corporate Compliance?
Compliance at the corporate level involves adhering to a wide range of rules, regulations, laws, and standards that are designed to protect every aspect of your business. Right from obeying safety guidelines to following the standards for paying wages, an organization must comply with all the local, state, and federal laws at all times.
Monitoring not only refers to continuously observing possible compliance violations but also includes predicting its occurance. Since the concept of business process compliance is vast, approaches related to process monitoring are hard to identify. Monitoring the compliance of business processes with relevant regulations, constraints, and rules during runtime has evolved as a major concern in practice.
The cost of non-compliance and monetary fines have been continuously increasing in the past few years. However, business owners are becoming impatient, as these consequences would affect the organization in many ways. Increased complexity, enforced business changes, and individuals being held personally accountable are all set to continue because of continuous compliance failures.
Why is Statutory Compliance crucial?
The following are the fundamental reasons why an organization shouldn’t take statutory compliance lightly.
1. Required by Law – All registered companies are mandatorily obligated by the law to follow statutory regulations and comply with them.
2. Audits – Non-compliance also invites unnecessary inspection and audits, leading to waste of time and money.
3. Financial Penalties – Failing to adhere to statutory compliance will lead to imposition of heavy fines and indirect losses to organizations.
4. Imprisonment – Severe cases of non-compliance may result in imprisonment of the organization’s CEO/Directors/Board members.
5. Brand Value and Market Reputation – Payment of fines and imprisonment can destroy a company’s brand name in the market it thrives in.
6. Forced Shutdown of the Company – In cases that exhibit perilous non-compliance, authorities can even order companies to cease operations.
There are several examples in the global business environment that show the repercussions of non-compliance. Look at the following cases.
A. The Department of Labour’s Wage and Hour Division (WHD) recently fined Populus Group that failed to pay its H-1B employees their wages when the worksites were shut down for holidays with $1.1 million.
B. Businesses that are found to have discriminated against an applicant’s protected class (e.g. religion, national origin, sex, etc.) can expect to pay up to $300,000 in compensatory and punitive damages, depending on the size of the offending company.
C. If you are alerted to an OSHA violation, don’t hesitate to correct it. OSHA, on inspecting a Unnerstall Contracting Co. LLC jobsite on account of an employee’s injury from a trench collapse, cited the company with four serious and three willful citation violations. The fine imposed was $224,459.
Technology-fueled Compliance Monitoring
Newer technology-driven solutions have emerged to protect businesses from non-compliance. Compliance requirements can be complex, and business owners may not always be fully aware of the latest rules and regulations. With the vast number of government guidelines for compliance, it can be likely for business owners to find themselves violating rules, leaving their companies open to penalties and even dissolution. Having a complete and thorough understanding of corporate compliance is crucial to protecting your business in the years to come.
That said, a technology-driven approach towards corporate compliance monitoring will help companies stay proactive from the regulatory standpoint irrespective of frequent amendments. There are numerous benefits that organizations can reap with this approach.
Illustrative Benefits of a Technology-driven Approach
A comprehensive compliance solution that is powered by a tech-driven approach:
– Reduces business risks
– Helps to expedite global expansion
– Enhances control and visibility
– Utilized a real-time, cloud-based platform
– Enables proactive alerts, notifications, and escalations to eliminate business risks
– Allows you to change priorities, delegate activities and monitor progress using an interactive global compliance command center
– Is flexible and customizable
– Includes intelligent dashboard, alerts, and analytics.
After all, when it comes to non-compliance issues, ignorance of the law is no defense. As they say – “Being Compliance is not a choice, but a mandate” the regulatory environment is only going to get fiercer day by day, and companies that miss to stay abreast of the global legal amendments might regret big-time.
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