Careful corporate governance today must include ensuring compliance with applicable rules and regulations. The management is therefore responsible for the implementation and control of necessary compliance measures.
In the event of a negligent breach of this duty of care, CEOs, board members, managing directors, managers and senior executives themselves can also be held liable.
A functioning compliance management system not only protects companies from fines in the billions but has now also become a figurehead.
There are many benefits of a compliance program such as improving organizational culture, protecting company reputation, and improving labour productivity and employee engagement.
Not having it, the company is exposed to legal risks, i.e. penalties, fines, imprisonment, disqualification from grants or product seizures; financial risks such as loss of investor confidence or decrease in potential earnings; business risks such as liens that would prevent the ability for the business to function properly; and an impact on reputation leading to loss of trust, decreased employee morale and decreased work productivity.
What is a compliant company?
A company’s degree of compliance (regulatory compliance) is often perceived as something very intangible. But basically, being compliant is a question of what it is that you need to be compliant with.
A company can be compliant with legislation, safety standards, quality standards, audit standards, or company policies in a broad sense.
The first exercise when companies have to carry out a compliance investigation is therefore to map the laws, rules, and standards that the company must follow.
Although the company might already have a good handle on these standards and regulations, it is also important to be able to document follow-up and regulatory compliance with authorities and audits to be a compliant company.
Main benefits of a compliance program
Compliance programs help mitigate risks and strengthen prevention and the resilience of companies. Organizations need to be aware of the specific risks that apply to the business, from the environment in which they operate to the industry, business partners, and changes in regulatory policies.
Regulatory compliance management or compliance is, in short, the best business card for any organization, as it will help:
- Improve the reputation of any company by relating it to terms of honesty, transparency, responsibility, and commitment.
- Increase competitiveness, as potential customers, suppliers, partners, etc. will prefer to establish commercial relationships or alliances with organizations that have clear compliance controls.
- Improve the possibilities in public tenders and with national and international companies.
Thus, increasing the value of organizations, as it will offer a clear advantage over any competitor that does not have a system of this type.
The management of regulatory compliance or compliance can be a great difference in any organization, since it will not only help in criminal terms but will also strengthen the company internally and externally since it is a broad model that covers all types of risks, including those of the different regulations, internal policies, codes of ethics and contractual commitments.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.