Compliance regulations and laws are ever-changing. In the past year alone, we’ve seen the introduction of EU and US AI regulations, the Corporate Sustainability Reporting Directive (CSRD), and the Digital Operational Resilience Act (DORA).
We’ve also seen new OSHA reporting requirements, new HIPAA regulations, and new required reporting on PFAS.
Managing new regulations and creating an effective corporate compliance program is challenging.
You need to create policies, procedures, and processes to meet requirements. You need to get organizational buy-in and cooperation. You need to educate your business.
The risks of not getting it right can be costly.
In 2023, we saw the biggest-ever GDPR fine issued to Meta of €1.2 billion ($1.3 billion).
In December 2023, a Minnesota contractor faced $1.8 million in OSHA penalties for a serious violation and 16 repeat violations involving trenching and excavation hazards.
In September 2023, L.A. Care settled $1.3 million in HIPAA fines for a “disregard for the safety and security of ePHI within the organization.”
Whatever industry you operate in, getting corporate compliance wrong is expensive. And that’s without even considering the impact violations can have on brand reputation.
All of this might sound somewhat overwhelming (or, potentially, familiar).
However, an effective corporate compliance program will deliver a solid foundation that can help you, your compliance team, and your organization reduce the risk of fines, and operate more effectively.
What is a corporate compliance program?
A compliance program represents a comprehensive set of policies, procedures, and controls designed to ensure adherence to all relevant laws, regulations, and internal ethical standards.
It functions as a sophisticated internal compass, steering your organization through the complexities of compliance, mitigating risk, and paving the way for sustainable success.
What is the purpose of a corporate compliance program?
- Risk Mitigation: It reduces the likelihood of legal and financial repercussions by proactively identifying and managing potential compliance risks like regulatory violations, ethical lapses, and operational misconduct.
- Reputation Protection: Non-compliance can be a public relations nightmare, eroding trust and damaging brand. A strong compliance program minimizes this risk, safeguarding the company’s reputation and fostering customer confidence.
- Operational Efficiency: By establishing clear guidelines and procedures, compliance programs streamline operations, minimize confusion, and prevent costly mistakes arising from non-compliance.
- Enhanced Due Diligence: A robust program demonstrates proactive risk management and commitment to ethical conduct, fulfilling due diligence requirements with third parties you do business with.
- Culture of Integrity: Strong compliance programs foster a culture of ethical behavior and responsible decision-making within the organization, promoting positive values and employee engagement.
- Continuous Improvement: The ongoing monitoring and assessment inherent in compliance programs encourages regular program updates and refinements, ensuring continued alignment with evolving regulations and best practices.
Why building an effective corporate compliance program is important
In short, it helps avoid fines and legal action, while also demonstrating to regulators that you’re compliant and take reasonable measures to align with the regulations they issue.
A well-designed and implemented corporate compliance program goes beyond ticking boxes. It empowers organizations to operate with integrity, safeguard their stakeholders, and navigate the complex regulatory landscape with confidence and preparedness.
It’s not just a shield against harm, but a catalyst for compliance success.
That being said, how do you go about building an effective corporate compliance program?
5 key elements of a compliance program
For seasoned compliance professionals, building a robust program is second nature.
However, even the most experienced leaders can benefit from revisiting fundamental elements and ensuring their program stands firm against evolving risks and regulations.
One way of doing this is by looking at official guidelines in your region. The UK Serious Fraud Office’s guidance is a good example. As is the U.S. Department of Justice Criminal Division’s Evaluation of Corporate Compliance Programs guidance.
Another is to continue reading this article. Below are 5 key elements of any effective corporate compliance program.
1. Policies and procedures
Policies and procedures are the fundamental cornerstone of any corporate compliance program.
An effective compliance program goes beyond creating hundreds of policies based on official guidelines, however. You also need to:
- Develop clear, concise, and user-friendly policies: Try to avoid legal jargon where possible and focus on practical guidance. Give real-life examples to show the rules in practice. Regularly review and update policies to reflect changes in regulations and best practices.
- Implement a robust document management system: Utilize dedicated software or platforms to streamline policy creation, distribution, and version control. Ensure accessibility across various devices and locations.
- Conduct periodic policy awareness campaigns: Remind employees of the existence and importance of the centralized repository. Encourage them to actively familiarize themselves with relevant policies and procedures. If you want to go a step further, use a tool like BRYTER’s Policy AI to help employees get answers to their compliance questions in seconds.
2. A culture of compliance
Ensuring organizational compliance starts at the top.
It sets the tone for creating an ethical and compliant business. It is the foundation of any effective compliance program. Without it, you’re unlikely to create a culture of compliance, and your program is unlikely to be successful.
How does one go about getting top-level commitment when it does not already exist?
- Leadership buy-in: Secure the support of your executive team by engaging with them from the start. Their visible commitment sets the tone for the entire organization and fosters a culture of compliance. So, they must be engaged from the get-go.
- Cross-functional collaboration: Break down silos by involving representatives from relevant departments like legal, finance, HR, and operations. This holistic approach ensures all perspectives are considered and potential blind spots are minimized.
- Effective communication: Clearly communicate the program’s purpose, benefits, and expectations to all employees. Utilize multiple channels such as town halls, intranet posts, and targeted training sessions to ensure comprehension and engagement.
- Have your finger on the pulse: Use technology like BRYTER’s Policy AI to monitor what your employees’ most common compliance questions are. That way, you can tailor your training and engagement efforts more effectively.
3. A Chief Compliance Officer (CCO)
Having a Chief Compliance Officer is essential for corporate compliance. Not only are they one of the most important members of any management team, but they are also a requirement for some regulatory bodies.
The U.S. Securities and Exchange Commission, for example, in 2002 stated that “a company should have an officer with ownership of corporate compliance and ethics issues, and of what Title III of Sarbanes-Oxley broadly refers to as “Corporate Responsibility.”
If you’re not a Chief Compliance Officer yourself, here’s why they’re so important to an effective corporate compliance program.
- Strategic leadership and expertise: A Chief Compliance Officer (CCO) brings a deep understanding of legal and regulatory landscapes, guiding your program’s development and implementation with proactive risk mitigation strategies.
- Cultural champion and advocate: The CCO fosters a strong culture of compliance throughout the organization. They spearhead training programs, build awareness, and champion ethical behavior, encouraging employees to actively embrace compliance as a core value.
- Independent oversight and accountability: The CCO serves as an independent watchdog, holding all parts of your organization accountable for complying with regulations and policies. They conduct internal audits, investigate potential violations, and ensure swift and effective corrective actions are taken.
4. Communication and training
Open and transparent communication is vital for fostering a culture of compliance.
Effectively conveying program updates, expectations, and procedures will empower employees to make informed decisions and navigate potential risks.
Training is also important, though as most of us know, employees don’t always remember what we teach them. That’s why it’s important to do the following:
- Utilize engaging formats: Go beyond traditional classroom sessions. Explore interactive e-learning modules and tools like BRYTER’s Policy AI which help reinforce what employees learn during your training sessions.
- Utilize diverse communication channels: Employ a multi-pronged approach that caters to different learning styles and preferences. Consider town halls, internal newsletters, targeted email campaigns, and tools like Teams and Slack.
- Promote two-way dialogue: Encourage open communication and feedback from employees. Establish anonymous reporting channels for misconduct or policy concerns. Address questions and concerns promptly and transparently.
5. Ongoing monitoring and review
Building a resilient compliance program demands continuous risk assessments, monitoring, and adaptation.
Implement systems to:
- Conduct internal audits: Schedule regular internal audits to assess your program’s effectiveness and adherence to best practices and regulations. Use the findings to identify and address any weaknesses or gaps in the program.
- Stay on top of changing regulations: Proactively monitor regulatory changes and industry best practices. Update your policies, procedures, and training programs accordingly to ensure your program remains aligned with evolving risk landscapes.
- Utilize AI: Compliance-specific AIs like BRYTER’s Policy AI allow you to ask questions about your policies in the same way that an employee would. You can also test and compare your organization’s policies against government-issued guidelines to ensure they meet key criteria.
Take your corporate compliance program to the next level with BRYTER’s Policy AI tool
BRYTER’s PolicyAI offers a big step forward for your compliance program.
Our AI-powered platform utilizes pre-trained algorithms to empower your workforce with instant, accurate answers to any compliance question.
PolicyAI goes beyond training and FAQs: it helps you identify gaps in your processes, proactively suggesting improvements to mitigate risk. It gives you a comprehensive audit trail, so you can easily demonstrate consistent compliance to regulators. It enables you to stress-test your policies against official guidelines and competitor policies.
PolicyAI doesn’t just answer questions; it empowers action. And it will help you build a forward-facing, more compliant organization.
Want to learn more? Click on the link below to sign up for a free trial.