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Proactive Compliance Leads to Greater Efficiency

By CIOReview | Wednesday, March 8, 2017

Proactive compliance refers to the best practice of applying a self-motivated approach towards industry regulations, and compliance standards and adhering to it to avoid any legal hassle. An organization that implements proactive compliance will take early steps to implement best practices that identify and address policy violations before they are legally brought into notice. But unfortunately, these efforts come into the picture only when company executives are either under threat of sanction or realize they may soon be. Think of proactive compliance as an ethical approach. It allows companies to stay compliant while increasing management visibility and reducing total long-term costs. It pushes the traditional boundaries of compliance to impact other strategic areas such as risk management, scenario planning, corporate benchmarking and strategy execution.

Moving to a proactive compliance management process may require some immediate efforts, but once it becomes a part of an organization, the rewards are tremendous.

Here are few steps that can get any organization started on this journey:

• The culture of a company and compliance should go hand in hand, and everyone—from new recruits to top level management—should realize that compliance is everyone’s responsibility and it should not be viewed as a one man’s job. The divisions in business are fast disappearing and the price that one has to pay has gone up significantly—from penalties and litigations to audits, diminished brand value and higher attrition rates. Hence, proactive compliance starts with every part of the business and every employee of the company. The companies should always look for ways to make compliance an element of everyone’s job. Adherence to rules and non-tolerance to unethical practices should be a part of the company’s core DNA.

• A strong compliance program in place should take care of all the risks and threats. The success of any plan depends hugely on its robustness and ability to endure long-term business pressures. Therefore, the next step to proactive compliance is to develop procedures that are in tune with the business, considering long-term sustainability and their ability to mould with change in the business landscape. Communication has a key role when it comes to reinforcing the compliance message throughout the entire organization. It not only helps to percolate the message down to the ranks but also creates a mechanism for receiving feedback from the ground—an essential tool for creating a sustainable compliance process. Regular training and frequent deliberations are just some of the ways to encourage a healthy conversation around the topic. Technology can help introduce checks and balances into processes, automate repeatable tasks and create an audit trail to track actions. The right technology tools can reduce efforts spent in risk assessment, testing, and reporting.

• The last but the most critical step to implement proactive compliance in the company is to move from data aggregation to data analytics. The company should use the objective as well as anecdotal information being gathered in the organization to derive meaningful insights.

A well thought out plan in place, which covers the various facets—starting from records management and ending at information governance can be vital for companies to save lots of money and time. Some of the benefits are listed below:

• Reduced clutter and chaos can lead to better search capabilities, which speeds retrieval of relevant data to improve customer service. It can also support improved decision making, by retaining only relevant information for business intelligence calculations.

• Proper auditing can help in getting a complete picture of the operations. This can bring to light any improper access to information and external threats to systems.

The so far widely held cost-centric view of compliance is fast disappearing. Compliance today is getting closely integrated with organizations’ core strategy, and is moving from the back benches to where the actual action is. A strong and proactive compliance in place can not only help the organization mitigate risks but also gain competitive advantage through efficient, effective and proactive management.