Regulatory compliance is an essential part of operating a business. Staying aware of those compliance obligations, however, can be challenging, and a robust compliance program will require a compliance management system.
What Is Compliance Management?
Compliance management is the process of adhering to governmental laws and regulatory requirements that apply to your industry. These requirements can change, and sometimes quickly; so implementing flexible compliance risk management into your operations is critical.
Without a robust compliance management program in place, your company may fail to meet government requirements, resulting in fines, time off-line, and lost revenue. In addition, non-compliance can often become exponentially worse over time, so it’s crucial to be diligent in your efforts to meet industry standards.
What Is a Compliance Management System?
A compliance management system (CMS) consists of an integrated system of documents, processes, tools, internal controls, and functions to make it easier for organizations to comply with regulatory and legal requirements. A CMS also minimizes harm to consumers because it drives compliance with the law.
A CMS helps organizations to better address risk management by assuring that their policies and procedures follow applicable laws and regulatory requirements. It also helps to manage employee training, communication, and monitoring.
A CMS allows an organization to know, understand, and implement its compliance responsibilities. More specifically, a CMS helps assure that its employees know these responsibilities and that compliance requirements are integrated into business processes.
In addition, an enterprise can use a CMS to review how it operates, check that employees are meeting their responsibilities, and take corrective actions.
Who Is Responsible for Compliance Management?
The board of directors is ultimately accountable for compliance with government laws and compliance regulations, as well as any other industry standards.
The board of directors must then communicate clear expectations to senior management and all parties engaged in the firm, including third-party suppliers and service providers. The board must also assure that clear compliance procedures are established and effectively disseminated throughout the firm.
Management is responsible for assigning the appropriate resources to implement compliance requirements. That includes running a compliance program, performing regular audits, and presenting reports to the board as needed.
What Are the Elements of a Compliance Management System?
There are three elements of an effective CMS system: oversight from the board of directors and management, the compliance program itself, and a compliance audit.
Board of Director Oversight
Your company’s senior leaders have many responsibilities, and compliance may not be at the top of their minds. Still, creating a system that flows from the top downward through the rest of the enterprise is key in communicating the importance of compliance to your entire organization.
Senior management will articulate and refine your compliance efforts, making it easier for your company to prioritize compliance activities and achieve its compliance requirements long-term. There should be a clear vision of what’s expected for compliance, and it should be communicated to the staff and any third-party vendors or contractors.
The board may also choose to recruit a chief compliance officer or compliance manager to lead the compliance function. Management oversight and consistent reporting will keep the board apprised of compliance issues, allowing the company to shift strategies and tactics accordingly.
Effective compliance is an ongoing process, and guidelines must be implemented to assure that all requirements are met. Your compliance program is the central hub of your compliance management system, where all controls and countermeasures will be designed and put into effect.
Most programs will consist of documents containing policies, compliance standards, internal controls, and processes that are enforced by leadership. These documents serve as reference tools for all employees to ensure they are doing their jobs consistently and correctly.
Your compliance team should also assign tasks to appropriate staff members as necessary. Workflows and communication should be tracked to ensure assignments and corrective actions are implemented. Reporting should be consistent and transparent.
A structured compliance training program for employees is essential. The program’s goal is not only to keep your company policies in line with current government guidelines; it’s also to protect the data of your customers and maintain your reputation as a reliable business partner.
Consumer Complaint Response
Customer complaints sometimes indicate a compliance weakness in a specific function or department within an organization. As a result, you should document all customer complaints received and take prompt corrective action.
It is critical to identify the source of the complaint. If the source affects a broader group of customers, it is necessary to address the more significant issue rather than simply the particular complaint. For example, a faulty product may be an isolated incident or a systemic problem that affects many customers.
Examiners will want to see whether the following conditions are met:
- Consumer complaints and questions are appropriately documented and classified, regardless of where they are submitted.
- Complaints and queries are immediately addressed, and corrective action is taken within a reasonable time.
- Complaints that highlight regulatory violations regarding possible consumer injury from unfair treatment or discrimination and other regulatory compliance issues are escalated accordingly.
- Complaint data drives process and product improvements.
- When applicable, consumer complaints result in retroactive remediation action to reduce the likelihood of recurrence.
Compliance audits are necessary for almost every industry. This entails an independent review that determines whether you adhere to internal policies and procedures as well as regulatory requirements. Audit reports allow leadership to assure ongoing compliance and help your company identify compliance risks.
In an external audit, an impartial party (the external auditor) judges your systems and protocols without bias. It can be challenging to maintain compliance over time, so having a fresh set of eyes and the expertise of a trained professional is invaluable to this process.
Audits can be stressful, but by familiarizing yourself with the applicable standards and keeping your records and reports in order, you can help your auditor find the information you need to stay compliant.
It also helps to perform ongoing compliance monitoring, risk assessments, and internal audits between external audits. This practice helps you monitor your compliance efforts in real-time and allows you to make corrections to your CMS as needed.
Enhance Your CMS With ZenGRC
Even the smallest businesses may find it difficult to keep up with compliance rules. As your organization grows, keeping everyone on the same page becomes more challenging. A successful CMS demands the correct tools and compliance software to help streamline your compliance activities.
Choosing a scalable and flexible compliance management tool might be the difference between enhancing and impeding your company’s compliance management. ZenGRC is a compliance software designed to handle the compliance requirements of an ever-changing environment.
Chief compliance officers (CCOs) and senior management will be able to track compliance risks quickly, simply, and dynamically in real-time. It is a single source of truth that ensures your business is always audit-ready.
Policies and procedures are revision-controlled and easily accessible in the document repository. Workflow management features include easy monitoring, automatic reminders, and audit trails. In addition, insightful data and dashboards highlight gaps and risk areas.
Schedule a demo today and learn how ZenGRC can automate and integrate your company’s compliance management system.