Organizations of all types and sizes, public or private, profit or non-profit are exposed to compliance risk. An organization’s failure to comply with applicable laws and regulations can impact its revenue and lead to a loss of trust, reputation, and business opportunities. Compliance and risk management are therefore two integral parts of the business.
Compliance refers to the act of conforming to a set of standards, regulations, or requirements. In general, compliance in business involves two important components:
- Regulatory compliance: the steps an organization takes to comply with applicable laws, regulations, and guidelines.
- Corporate compliance: The actions and security programs an organization implements to ensure compliance with internal policies and procedures in addition to external regulations.
Companies need to comply with both legal and corporate compliance to avoid potential fines, legal action, or shutdowns.
Risk management is the process of identifying, assessing, and managing potential threats that could harm companies’ reputations and profits. These risks can come from a variety of sources, such as non-compliance with legal obligations, financial uncertainty, and more. Avoiding these potential threats is achieved through risk management. Risk management helps organizations prepare by minimizing problems before they occur.
What is compliance risk management?
Compliance risk management is the process of identifying, assessing, and mitigating potential losses that could result from an organization’s failure to comply with laws, regulations, standards and policies, and procedures, both internal and external.
A company may be involved in the following compliance risks;
- Corrupt and illegal practices.
- Privacy breaches.
- Environmental concerns.
- Process risks.
- Workplace health and safety.
Compliance risk management is a process that continuously examines changes in the environment to ensure that an organization’s compliance is up-to-date. It is the regular review of compliance policies, procedures, and new policies in light of regulations. To minimize all possibilities in this continuous process, we work one-on-one with our clients and manage this process with our professional lawyers.
