The growing needs of industries
In the global economy compliance serves as a formula or guideline on how proper business practices should be conducted within an organization. In recent developments compliance has been growing to encompass the way different industries interact or conduct business with each other on the local and international stage. Compliance has become an imperative across the world especially in sectors such as Banking, Financial Services, Insurance, Energy and Utilities, Biotech and Pharma, Information Technology and Telecom. Spending on compliance management continues to grow as businesses strive to react to new requirements and regulations and the ensuing trend towards increasing punitive action by governments and international regulators. It seems that very few industries are immune from the reach of public scrutiny and government regulation. With severe financial penalties, loss of license and even jail terms at risk the call to action for compliance is now part of everybody’s job. The need for achieving and maintaining a sound culture of compliance is a role that the whole organization / industry must take part of.
What is driving change?
There is a lack of faith from the general public that companies are now having to reclaim through demonstrating themselves to be good corporate citizens. Whether it’s BP copping a $9.2 Billion dollar fine for the Gulf of Mexico Oil Spill or Big Pharmaceutical shelling out $13 billion dollars over the past few years, the cost of not getting it right is enormous both in terms of reputational damage and financial loss.Regulators and enforcement agencies around the world have gained more powerful enforcement tools and are becoming more prescriptive in their evaluations of compliance programs. In addition, new legislation is being enacted that places burdensome new constraints and compliance requirements on companies across all industries. Directors of corporates are increasingly being held accountable for creating a ‘compliance culture’ within their enterprise and Industry Associations are attempting to minimise over-zealous regulatory burden by implementing self-regulation standards most commonly in the form of Continuing Professional Development (CPD).
Company Drivers for Compliance
According to the 2013 SAI Global Compliance and Ethics Benchmarking Survey the following business drivers for compliance were identified
- Protecting brand and reputation is usually the primary driver for compliance programs.
- Pressure from the CEO or Board of Directors
- Pressure from regulators and external auditors
- Unable to rely on insurance as the main recourse for dealing with compliance issues.
Common compliance elements making up a corporate compliance programs include:
- Employee compliance training
- Policy Management
- Third Party Training & Risk Management
- Demonstrating Effectiveness