The reality in which your business operates changes: new regulations, shifts in business strategy, changes to your workforce.
All of this means your organization is in constant need of monitoring your existing compliance framework to ensure it still meets the needs of the business.
This guide delves deep into the hows and whys of performing a compliance gap analysis.
We’ll walk you through the key steps, explaining what a compliance gap analysis is, why undertaking them is critical to your organization, and how to do them more effectively.
What is a compliance gap analysis?
A compliance gap analysis is a process used to identify and assess your organization’s state of compliance with national, global, and industry-specific regulations and standards.
It can help you identify gaps in policies, procedures, communication, and training, highlighting potential risk areas within your organization.
Doing a compliance gap analysis is critical to ensuring your organization remains compliant, no matter what industry or geography your organization operates in.
When do you need to do a compliance gap analysis?
A compliance gap analysis is something you need to undertake regularly at an organizational level. Often this is something that is done on a quarterly or annual basis, depending on the regulatory complexity of the industry your organization operates in.
There are also several instances where you may need to do a one-off compliance gap analysis. These include the following.
Regulation changes all the time. Take, for instance, the EU’s 2022 Digital Operational Resilience Act—or the annual regulatory amendments to HIPAA and OSHA in the U.S.
When new legislation or amendments come into force, it’s important to undergo a gap analysis to identify whether your current organizational policies and procedures meet these new regulations.
After risk assessments
A risk assessment identifies potential threats and vulnerabilities but doesn’t necessarily offer specific guidance on addressing them.
A gap analysis, conducted post-assessment, bridges this gap by outlining the differences between your current practices and the controls needed to mitigate identified risks.
Doing a gap analysis provides actionable insights that allow you to prioritize interventions and target resources towards the most significant weaknesses.
During internal audits
Conducting a compliance gap analysis during an internal audit serves several crucial purposes that enhance the effectiveness and value of the audit.
It helps you narrow the focus on high-risk areas. It can help you uncover hidden vulnerabilities. In turn, it helps you focus strategically on the areas that matter most.
As a result, it will help you become more audit-ready.
When you start a new role
When you move to a different organization, or even to a different line of business, it’s important that you, as Chief Compliance Officer undergo an organizational compliance gap analysis so that you can set a baseline and identify potential gaps and risks.
It will also help you align compliance against wider business goals, and ultimately, get a better understanding of the organization’s compliance status quo.
How to do a compliance gap analysis
The key steps involved in a compliance gap analysis are as follows.
1. Identify the scope of your compliance gap analysis
- Which regulations or standards are you targeting? This could be anything from industry-specific frameworks like HIPAA and OSHA to broader ethical guidelines like ISO 26000.
- What areas of your organization will be assessed? Focus on departments, processes, or systems relevant to the chosen regulations.
2. Compare existing policies against compliance requirements
- Analyze the inconsistencies between your current practices and the required controls. These are your “compliance gaps.”
- Prioritize the identified gaps based on their potential impact and risk severity. Consider factors like financial penalties, reputational damage, and operational disruptions.
3. Build a plan to address the compliance gaps
- For the gaps you’ve identified, create a specific action plan: What needs to be implemented or improved to achieve compliance?
- Set clear timelines, assign responsibilities, and allocate resources for each action item.
- Prioritize critical actions based on the severity of the risks.
4. Track the progress of your compliance program
- Conduct regular reviews and audits to assess the effectiveness of your implemented controls and adherence to regulations.
- Be prepared to adapt your action plan based on ongoing monitoring and changes in the regulatory landscape.
The benefits of doing a compliance gap analysis
The clearest benefit of doing a compliance gap analysis is that it will help your organization mitigate risk and become more compliant.
There are also several other benefits. These include:
Prioritized compliance efforts
A thorough gap analysis prioritizes compliance efforts by revealing the severity and impact of each gap. Understanding the impact of gaps guides compliance leaders to focus resources on the most pressing compliance needs.
Proactive risk mitigation
Compliance gap analysis identifies risks hidden in your processes, letting you shield yourself from financial, legal, operational, and reputational damage.
Conducting a gap analysis allows for the strategic allocation of resources to ensure compliance, including personnel, technologies, and other essential investments. This approach not only guarantees regulatory adherence but also results in cost savings over time by preventing scrutiny and legal penalties associated with non-compliance.
More efficient processes
By identifying and rectifying vulnerabilities, compliance gap analysis enables streamlined workflows and easier navigation of compliance challenges. This empowers organizations to refine policies, update SOPs, and strengthen internal controls.
Use BRYTER’s Policy AI tool to enhance your compliance gap analysis
Undertaking compliance gap analyses is no simple matter. Being able to spot gaps in your policies and procedures can be tough when you have hundreds in your portfolio. Comparing these policies with industry and national standards can be even more difficult.
BRYTER’s Policy AI tool helps simplify compliance gap analyses. With our pre-trained compliance-specific generative AI, you can upload all of your policy documents to your own Policy Domain and ask questions to stress-test them.
You can also upload official government and industry body materials, and stress test your policies against official guidelines.
Compliance gap analyses are critical for every compliance leader. Policy AI helps you expedite your gap analyses, get more accurate results, and ultimately, make you a more compliant organization.
Want to learn more about Policy AI? Sign up for a free trial here.