Today, many organizations are increasingly hiring compliance managers to meet the growing demands of the industry, the government, and stakeholders. Compliance managers champion corporate accountability, integrity, and ethics.
What is Compliance?
Compliance refers to the practice of following orders and directives. It encompasses both a pragmatic and ethical component. Its role is crucial to your organization because it helps you manage risk, avoid lawsuits, and maintain a positive reputation.
In support of both government and industry directives, compliance managers end up fulfilling five essential functions. They must first identify all potential business risks, then design and implement proper controls of your compliance program. When the program is in effect, compliance managers must continually monitor all related controls to identify and report weaknesses to the appropriate chains. The last function is advising your management and board of directors on issues pertinent to compliance to ensure ongoing adherence.
Who is a Compliance Manager?
A compliance manager’s responsibility is ensuring that your organization adheres to the strict regulatory requirements that govern your business. They are also responsible for ensuring that all your operations meet the official standards required by your industry. In layman’s terms, a compliance manager oversees all your business’ risk management activities.
Compliance managers must have both intuitive and innate knowledge of your company’s culture and goals, as well as business law and standard industry practice.
How the Information Technology (IT) Environment Defines Compliance
Since compliance comes in numerous forms, managers need to be versed in the multiple compliance languages. It is essential that you hire a compliance manager who understands and appreciates the different facets of compliance as well as their implications for your operations.
To remain on top of the different regulations that shape your organization’s operations, you need to appreciate overlapping laws affecting you either directly or indirectly. Thus, your compliance manager should be able to implement various controls imposed by different regulatory agencies.
An excellent example of this overlap of agency regulations is when a non-profit healthcare provider must comply with both the Health Insurance Portability and Accountability Act (HIPAA) as well as the Sarbanes-Oxley Act of 2002 (SOX). This overlap of agency regulation requires the keen attention of a competent compliance manager because both have monetary penalties for noncompliance.
Despite the fact that SOX and HIPAA focus on different information, both have standard controls for the IT sector. Therefore, compliance managers are tasked with navigating the differences and similarities in controls required.
Industry standards have no penalties for non-compliance, unlike government regulations. However, competitive business environments have necessitated businesses to adopt the best business practices including adherence to these standards. A case in point is the Industrial Standards Organization (ISO) that established the ISO-27001 standard, which controls the IT landscape.
Overlaps in industry standards also exist. Businesses that are controlled by the ISO standards and accept payment through credit and debit cards must also comply with existing Payment Card Industry Data Security Standard (PCI DSS).
Although industry authorities don’t have the disciplinary authority of the law, they represent information controls for business operations that are dictated by industry peers. Your compliance manager should always be on top of set industry standards and any other developments affecting your business.
After the determination of industry standards as well as government regulations plus their implications, your compliance officer should come up with a policy that incorporates ongoing compliance procedures, risk, and governance.
How Your Compliance Director Assesses Risk
In most cases, many compliance management positions and job descriptions lump risk and compliance together. Today’s model of compliance, governance, and risk demands the marrying of compliance and risk management jobs.
In this case, risk management acts as the building foundation for compliance management policies. Therefore, before your compliance manager determines your organization’s control landscape, they must first identify your data storage location’s risk tolerance.
For instance, information that is stored in an unconnected corporate desktop may be classified as having a lower risk compared to sensitive data stored on a personal device owned by an employee. This demonstrates that the controls that govern your compliance policy will vary based on possible accidental or malicious access.
Whether it’s complying with government regulation, an industry standard, or internal policy, what’s evident is that your compliance manager must follow and enforce set customs. Nevertheless, compliance should be done taking into consideration your internal risk tolerance.
The Role of a Compliance Management System in Simplifying Compliance Management Jobs
Compliance management jobs warrant organizing vast amounts of information to protect your business. Often, early business enterprises require little compliance, especially those that start small. However, as your organization grows, its continued success is dependent on several factors including the observance of relevant regulations, standards, and policies required to achieve profitability. This requires competent software.
At the start of your business, compliance management may have meant spreadsheets because you only had a few standards to follow, which made tracking your activities easy and cost-effective. Many IT businesses start as sole-proprietorships, therefore, if you start a business producing RFID chips, you only need a smartphone or a laptop to collect information.
Once your chips become in demand, you hire a few more people to help in their manufacture and distribution. Now, you have to collect employee information records on top of customer information; thus, you add a second spreadsheet. In a couple of years, you expand your services into the healthcare industry by tracking IoT devices. At this point, you add another compliance risk management spreadsheet that has a financial risk for noncompliance.
As you can see, scaling your business operations means tracking multiple regulations and standards within your corporate procedures and regulations. Here, spreadsheets are not cost-effective since they require a lot of time to review. You are better off with compliance management software that is easy to use and allows you to share information between relevant stakeholders.
About the Author:
Ken Lynch is an enterprise software startup veteran, who has always been fascinated about what drives workers to work and how to make work more engaging. Ken founded Reciprocity to pursue just that. He has propelled Reciprocity’s success with this mission-based goal of engaging employees with the governance, risk, and compliance goals of their company in order to create more socially minded corporate citizens. Ken earned his BS in Computer Science and Electrical Engineering from MIT.