The Rise and Need of Compliance Management
Tags: Compliance Management, Risk, Risk Management, Compliance

In the early 1990s, when the term was adopted, especially in banking institutions, compliance management was only synonymous with legal compliance. Over time, however, it became apparent that it was impossible to implement compliance procedures without full knowledge of all internal processes. For this reason, the concept has been enriched and covers everything from the performance of employees to the president of the company.

Compliance is no longer a choice in the corporate world, it is a prerequisite for the sustainability of institutions. A survey by the British consultancy Deloitte, carried out with 103 companies in 2013, proves the increased concern of institutions in adhering to good compliance programs. That year, only 30% of the organizations surveyed claimed to have a structured compliance program. In 2016, this percentage increased to 65%.

But increased demand for solutions does not mean that most companies are in the highest degree of compliance. Another survey carried out with 642 organizations in 2017, showed that 48% of the institutions are still exposed to risks arising from ethical deviations and fraud. This is because despite being more aware of the need to adopt compliance solutions, many companies still do not have really efficient compliance platforms and solutions.

Good Compliance Practices

In addition to managers, employees must have knowledge about compliance and the rules, regulations, and corporate policies that apply to the company. They need to understand, among other things, about the types of conduct, and for that, companies must be ahead and provide, for example:

Individual and team training on their codes of conduct.

Training in high-risk areas, such as finance, controllership, and contracts.

Encouraging participation and building a compliance culture.

Thus, employees will be able to recognize, act and report illegal or unethical activities that they eventually encounter within the company. It is also important to provide specific communication channels so that employees can make anonymous reports, inform situations that must be investigated or, simply, answer questions. This direct contact with the people on the front line helps managers to understand what problems they are facing and to propose solutions in line with the compliance policy.

The Digital Transformation

With the innovations brought about by the advancement of modern technologies, services that were previously done manually were replaced and optimized by automated operations, guaranteeing detailed data analyzes that allow planning, projections, and even greater predictability of results.

Investment in digital transformation is increasingly essential to maintain the competitive potential of companies in line with what is required for the market. With the implementation of specialist cloud software, this path towards digital transformation ends up becoming a one-way street, enabling companies and people to experience a new experience of productivity and results. Many businesses have been interested in digital transformations for a long time but there was always a major obstacle — the cost was too high. Large enterprises across the world had no problem implementing the technology they needed, because large enterprises have the type of margins which allow them to invest millions of dollars into compliance monitoring tools.

The problem is that we cannot expect smaller businesses to invest millions of dollars in risk and compliance technology. However, that is why we are seeing such a rise in talk about risk and compliance technology now — the technology’s cost has finally gone down to the point where even small businesses can easily implement the technology they need. The biggest contributor to the decrease in costs of risk and compliance technology is the advent of cloud solutions.

Cloud solutions are much cheaper to implement when compared to on-premise solutions. When a company implements an on-premise solution, it must also invest in the hardware requires to run the solution. This includes servers, network infrastructure, and much more. The business must also pay the vendor to send its implementation experts over to the organization and bear all the expenses of such channel. The business will also have to pay the vendor whenever it requires experts to come in and fix anything.

All these costs are eliminated in cloud solutions. Since the solutions run on the cloud there is no reason to invest in new hardware to run the solution. There is no need for the implementation experts to travel either — they work directly from the vendor’s office. All the work they need to do is happening on the cloud. Cloud solutions are also available in modular forms. Instead of purchasing the whole solution, businesses can get access to the parts of the solution they need, further decreasing the costs of implementing risk and compliance technology.

Implementing such technologies gives smaller businesses access to cutting-edge risk and compliance management systems. The significant increase in risk and compliance efficiency is coupled with only a slight increase in overall costs.