Risk and Compliance: Too Important to Take Lightly
When you’re trying to focus on your business’s operations the last thing you want to think about is compliance. But in the complex world of modern commerce it’s more important than ever to ensure your company is following proper compliance procedures. In this article we will give a brief overview of the importance of compliance and some of the various risks associated with not keeping up-to-date with your region’s regulations.
Compliance in the USA
to follow proper compliance procedures in the United States can result in both civil and criminal charges being filed against your firm or its employees. The type of charges depend entirely on the individual situation. The United States is no stranger to large scale compliance issues — many large American corporations such as Enron have gone under due to an inability to adhere to regulations. Not only did Enron fail due to their apparent fraud, but their auditors, Arthur Anderson, also went under because of their failure to adhere to regulations. This is one of the biggest corporate failures in modern history, and is largely down to a lack of internal and external compliance. While these are large examples of compliance failures, it doesn’t mean your small business isn’t open to similar problems. Legal frameworks in the United States make it easy for individuals to sue companies for wrongdoing — don’t leave yourself exposed.
Keeping On Top of Compliance
One of the hardest parts about compliance is its ever-changing nature. Staying on top of the latest regulations in your industry can be a difficult and costly expense. That’s why it may be valuable to hire a third-party to advise you on compliance and train your staff members. This way you don’t have to interpret complex frameworks by yourself — entire companies devote themselves to remaining up-to-date with your industry’s regulations. It is important to ensure your company is complying with legal regulations, otherwise you may be opening yourself up for devastating costs.
This article has focused largely on potential legal or criminal costs associated with ignoring compliance. But there are many other benefits of having a company that is focused on compliance. Not following modern regulations can have terrible health and safety impacts on your employees. Depending on your industry, compliance can make the workplace much safer, which in turn reduces potential risks to your employees. Employees working in a company that follows compliance procedures may also be less likely to leave their job. Compliance can create a more cohesive culture in your work place.
Downstream Costs: Why Compliance is an Investment
Many businesses forgo spending money on compliance in order to cut internal costs. This is an ill-advised strategy as the downstream costs can be enormous. Allowing yourself to be opened up to substantial legal costs could spell the end of your business. In addition, you may be putting yourself at risk by having chronic high turnover in your firm, which has considerable costs over time. Funding compliance should be viewed as a true investment — it has the ability to have a real impact on your company’s balance sheet.