How to Create a Corporate Compliance Program
Setting up an effective corporate compliance program can become a complex undertaking, especially given increasing globalization and advancing technology. Staying on top of long-standing regulations, as well as emerging policies, can take significant resources. The fees and risks associated with failing to comply, however, can cost much more than your money and reputation—it can even come with legal or criminal penalties.
Think of a robust program as an investment in the defense of your business's success and longevity. Compliance departments are responsible for identifying, preventing, monitoring, resolving and mitigating the risks an organization faces. Here's how to get started on your compliance journey.
Conduct a risk assessment
Begin by identifying the policy requirements and regulatory risks your company faces. You'll want to review industry best practices as well as government policies. Understand how compliance risks might align with or impact your business's strategic goals and objectives. When necessary, engage qualified compliance and legal professionals to help.
If your business operates in multiple jurisdictions, determine what rules apply to your operations. Look beyond requirements in your geographic location to any concerns for your supply chain and key stakeholders. For example, a raw materials vendor or finished inventory transporter may be subject to rules and regulations that impact your operations. Or, your company may need to comply with certain standards and specific paperwork requirements for them to do business with you without fines or penalties.
Establish clear policies and procedures
Corporate compliance management is an ongoing responsibility for each employee, from the plant floor to management to the C-suite. Once you identify risks, design policies and controls along with actionable steps. Streamline rules when possible to avoid duplicating efforts or creating unnecessary complexity.
Set up ways to monitor the implementation and effectiveness of control measures. Create a code of conduct for reporting and resolving issues. Questions to keep in mind include:
- What certifications will you need to show compliance, and how can you prepare to acquire them?
- How can you empower your workforce to report potential compliance risks, such as illegal behavior or corporate fraud, without fear of retaliation (for example, creating an employee hotline for anonymous questions or reporting)?
- How will you resolve compliance issues as they arise while minimizing the impact on the business?
Communicate policies to all stakeholders
The best compliance policy has little value if employees aren't aware of it. Train everyone and make written policies easily accessible. Prepare your team to make reasonable judgment calls to escalate and track ongoing issues as applicable.
Buy-in starts at the CEO level, policies should be framed in terms of ROI and risk management. Strive to integrate respectful awareness for the policies into the corporate culture.
Set up your compliance team
A robust corporate compliance program can require keeping track of several moving parts and people. Many companies decide to set up a stand-alone internal compliance team. Smaller businesses may decide to train members from each operational area to act as the compliance point person for their team. It's also possible to take both of these approaches.
Whatever route your business decides to take, keep in mind that compliance professionals don't need to be attorneys. However, your team should have a broad understanding of the laws and best practices that apply to your industry, business and day-to-day operations. They should also have the communication skills to advise leadership on critical compliance issues and train employees on how to avoid and address risks. Enable your compliance team to implement controls and policies for emerging risks as well as resolve them.
Investing in top talent for your compliance team can result in better operations, employee safety and retention, and even stronger profits as your business can avoid fines and other risk-related financial penalties.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.