Compliance is an issue that businesses and organisations need to maintain and update their awareness of regularly.
When a business is at compliance risk, it means that there is a potential exposure of the business to legal penalties, financial forfeiture and material loss as a result of failing to abide by industry laws, regulations, internal policies or prescribed best practices.
Every business runs a risk of non-compliance if they fail to understand their responsibilities as a corporate entity or as the representative of their employees. If your business fails to comply with the relevant laws and requirements, your reputation, business opportunities and overall value my suffer.
Being aware of the different types of compliance risks that may impact your business is important. It may be impacted by the following:
- Corrupt & illegal practices: Legal compliance ensures that the organisation, its agents and employees are abiding by the laws and regulations of the industry
- Common legal compliance risks may involve illegal practices, such as fraud, theft, bribery, embezzlement, etc.
- Privacy Breaches: The violation of privacy laws, handling sensitive data/information and being unprepared for taking appropriate action to safeguard this data.
- Environmental Concerns Or Inaction: The damage that your business/organisation may be committing to the environment or adding to the overall pollution. Integrating sustainability into your business strategy may assist in mitigating this risk.
- Process Risks: This is a failure to follow an established procedure for completing a task or a deviation from the standard process for your business.
- For example, a company must have a documented procedure for accessing its network remotely. If an employee abuses the proper procedure for remote access, it is considered a process risk.
- Workplace health & safety: companies are legally required to follow specific health & safety protocols. Failure to comply with these standards could open your business to liability concerns and legal ramifications (such as worker’s compensation claims).