Compliance is a constant issue that affects businesses in multiple ways every day. Not only must your compliance program address individual acts of misconduct; the program must assure that your organization follows laws, rules, and regulations overtime — every day, day after day, in perpetuity.

In the ideal, compliance management leads to a culture of compliance, which focuses on both regulatory compliance (adhering to legal rules and regulatory requirements) and corporate compliance (following a company’s internal policies and rules around risk management).

To do that over time, however, chief compliance officers (CCOs) need to create and maintain compliance programs and management systems that can evolve along with whatever new legislation or new compliance risks might come along.

In this post, we’ll share some of the key elements involved in a successful and evolving compliance strategy.

What is a compliance strategy?

A compliance strategy is a comprehensive plan or approach developed by an organization to ensure that it adheres to all legal requirements, industry regulations, standards, and ethical practices pertinent to its operations. This strategy is crucial for minimizing risk, maintaining a good reputation, and avoiding legal penalties and financial losses. Here’s what typically comprises a compliance strategy:

1. Understanding Applicable Regulations:

  • Identification of Requirements: The first step is to understand all the laws, regulations, and standards that apply to the organization. This could include international, federal, state, and industry-specific regulations like GDPR, HIPAA, PCI DSS, etc.

2. Risk Assessment:

  • Evaluating Exposure: Determining the areas where the organization is most at risk of non-compliance and assessing the potential impact. This involves identifying processes, operations, or areas that are susceptible to compliance failures.

3. Policy Development and Documentation:

  • Creating Guidelines: Developing clear, comprehensive policies and procedures that outline the organization’s commitment to compliance and the steps employees should take to adhere to these standards.
  • Documentation: Keeping detailed records of all compliance-related activities, including policy updates, training sessions, audits, and any incidents of non-compliance.

4. Implementation and Training:

  • Integrating Compliance: Ensuring that compliance procedures are integrated into everyday business processes.
  • Employee Education: Conducting regular training sessions to educate all employees about their compliance responsibilities and how to recognize and avoid potential issues.

5. Continuous Monitoring and Auditing:

  • Regular Reviews: Implementing systems to monitor compliance continuously and conducting regular internal or external audits to ensure policies are being followed.
  • Adaptation: Making necessary adjustments to policies and practices in response to any identified issues, changes in laws, or business changes.

6. Reporting and Communication:

  • Transparent Communication: Maintaining open lines of communication about the importance of compliance within the organization and providing ways for employees to report suspected non-compliance.
  • External Reporting: Meeting reporting requirements set by regulatory bodies and promptly informing them of compliance issues or breaches when necessary.

7. Enforcement and Discipline:

  • Accountability: Implementing disciplinary procedures for non-compliance and ensuring that they are consistently enforced to deter violations and maintain a culture of compliance.

8. Continuous Improvement:

  • Feedback Loops: Regularly reviewing and updating the compliance strategy to reflect new risks, regulatory changes, and the evolving nature of the business.

By developing and implementing a robust compliance strategy, organizations can effectively manage their regulatory obligations and minimize the risks associated with non-compliance. This proactive approach is crucial for maintaining operational integrity, protecting the organization’s reputation, and ensuring long-term success.

What are the goals of a compliance strategy?

The goals of a compliance strategy are multifaceted, aiming to ensure an organization’s activities are in line with legal requirements, industry standards, and ethical norms. Here are the primary goals a comprehensive compliance strategy seeks to achieve:

1. Regulatory Adherence:

  • Ensuring Legal Compliance: The primary goal is to ensure that the organization complies with all applicable laws, regulations, and guidelines pertinent to its operations. This includes international, federal, and state regulations, as well as industry-specific standards.

2. Risk Mitigation:

  • Identifying and Reducing Risks: To proactively identify potential areas of compliance risk and implement controls to mitigate these risks. This helps prevent legal issues, financial penalties, and damage to reputation.

3. Operational Efficiency:

  • Streamlining Processes: To integrate compliance into the daily operations smoothly and efficiently, ensuring that adherence to regulations doesn’t hinder operational effectiveness but rather enhances the process reliability and quality.

4. Reputation Management:

  • Maintaining Reputation: To build and maintain trust with customers, partners, and regulators by demonstrating a commitment to legal and ethical standards. A strong reputation for compliance can be a significant competitive advantage.

5. Cultural Integrity:

  • Fostering an Ethical Culture: To instill a culture of integrity and ethical behavior throughout the organization by educating and engaging employees in compliance efforts, ensuring they understand and adhere to the company’s ethical and legal standards.

6. Preparedness and Response:

  • Incident Management: To develop the capability to respond swiftly and effectively to compliance issues as they arise, minimizing their impact and learning from them to prevent future occurrences.

7. Financial Integrity:

  • Avoiding Financial Penalties: To avoid the costs associated with non-compliance, including fines, legal fees, and the potential for lost business or reduced operational capacity due to imposed sanctions.

8. Continuous Improvement:

  • Adapting to Change: To regularly review and update compliance policies and practices in response to changing laws, industry standards, and business activities, ensuring the organization remains in a state of continuous compliance.

9. Stakeholder Confidence:

  • Building Trust: To reassure stakeholders, including customers, employees, investors, and the public, that the organization is well-managed, reliable, and committed to conducting business responsibly.

By pursuing these goals, a compliance strategy helps organizations not only avoid the negative consequences of non-compliance but also enhance their operations, culture, and standing in the market. It’s a proactive approach that’s integral to sustainable, ethical, and successful business practices.

What Are the Key Steps of a Compliance Strategy?

To begin, let’s cover the basic steps that should be present in your compliance strategy.

Understand the Business Landscape

The compliance strategy must take into account the environment in which the company operates: the industry, its geographic location, the customers it serves, and the business model.

The chief compliance officer needs to understand all these elements, to have a clear sense of the regulatory landscape and the needs of the compliance program. That’s how the organization can identify, and avoid, risks of non-compliance. (An information security questionnaire can often be a great place to start.)

Emphasize Data Protection

Even when companies are not directly covered by data protection regulations such as GDPR or HIPPA, those rules have a way of reaching a wide range of businesses. Compliance officers need to understand how globalization, social media, and the handling of personal data can affect their businesses anyway, and change the company’s risk profile.

Effective compliance strategies must take these forces into account, and place special emphasis on cybersecurity mechanisms when developing compliance programs and implementing compliance activities. In doing so, they can be sure to protect their companies and their stakeholders from the administrative, commercial, and reputational consequences of data breaches.

Take the Team Into Account

The company’s rules and regulations are carried out and enforced by people. Consequently, an effective compliance strategy must be able to formulate processes that involve training personnel, recruiting talent, and monitoring adherence to policies and procedures.

Facilitate Transparency

Compliance strategies should be developed with the objective of transparency in mind. Regulators, law enforcement, audit firms — they will all want to see evidence of the organization’s obedience to compliance obligations. So your compliance strategy must anticipate the need for evidence and documentation, to satisfy any parties that come asking about your compliance program’s success.

Support with Technology

Keeping track of all regulations and related activities is not an easy task, and is itself a risk factor for non-compliance.

Today new technologies allow compliance teams to monitor all the elements of compliance programs and regulatory changes, which provides greater assurance that compliance processes are working as expected and allows better detection of any non-compliant events.

This is especially true in the case of multinational businesses, which labor under an enormous number of rules and regulations from multiple jurisdictions, while also dealing with thousands of employees scattered across complex enterprises.

Why You Should Regularly Revisit Your Compliance Strategy

In many cases, compliance failures aren’t due to the absence of compliance systems; they’re due to the misapplication or obsolescence of those systems. Hence the importance of revisiting your compliance strategy regularly, to be sure the strategy still fits the needs your business has.

For a compliance strategy to remain effective, it must adapt to the needs of the company as the business expands, launches new products, enters new markets, restructures existing operations, acquires new subsidiaries, divests older ones, and so forth. Your strategy must also be able to digest new laws, rules, and regulations, and the new burdens they might place on your company.

ZenGRC Has a Compliance Solution for You

ZenGRC is compliance software created specifically to meet the needs of a constantly evolving compliance landscape.

With it, CCOs can track non-compliance risks quickly and easily, based on the particular needs of each compliance framework in real-time.

In addition, ZenGRC contains a series of formats adapted to various high-impact national regulations and international standards and frameworks such as CCPA, GDPR, ISO, and many others.

In doing so, organizations can eliminate duplicate work and minimize the time required to implement and monitor policies.

With support from subject matter experts, dynamic visualization content, and other technical risk assessment tools, ZenGRC is the ultimate solution to resolve compliance issues and better manage your compliance strategy over time.

Schedule a demo to learn how we can help guide your organization to confidence in infosec risk and compliance.