22 February 2019
Compliance can easily be seen as a monolith. There is the perception that it will always be the first and foremost thing on the mind of your business, and that a failure in compliance is the point of no return. The reality is much different. Complying with regulations and standards is a complex, ever-changing business with many different moving targets across all sectors of industry.
That’s not to say it’s impossible to nail compliance, only that the ever-shifting sands make it difficult if it is not the foremost thing on the agenda — which it rarely is. Legal and compliance departments do not generate profit or earnings, so why would it be? The compromise between a threadbare compliance function that is regularly playing catch-up and a state-of-the-art compliance function is a regulatory compliance reporting template.
The function of a regulatory compliance reporting template
A regulatory compliance reporting template is an essential part of your compliance function. It is a way of thinking through compliance that allows for a discrete set of rules and procedures to optimize the compliance function. There are many ways to present and organize a regulatory compliance reporting template. It makes sense to organize such a template into a number of sections, which could include the following:
- A description
- A list of non-compliance conditions
- A summary of specific non-compliance conditions
- A section explaining the reasons behind the non-compliant findings
This sounds more complex than it is, so let’s break it down:
The description is the explanation of the regulation in question. This is the most straightforward portion of the template.
#2: Non-compliant conditions
These are all of the possible manners in which to be noncompliant. This section features the number of possible noncompliance issues, and essentially functions as a list. The one important detail here is that each issue may function as an issue in more than one section, and thus, the number of issues across all sections may exceed the total number of issues within each section.
#3: Unique noncompliance conditions
The issues contained within this part of the report are the issues that have occurred specific to the data being analyzed, and thus, will only appear once.
#4: Noncompliance conditions explanations
This is a list of explanations regarding how each noncompliant application is noncompliant, and to each condition there should be a resolution or remediation attached to chart a course of action.
How a regulatory compliance reporting template is employed
These aspects of the regulatory compliance reporting template are used generally in an automatically generated compliance report via a sophisticated compliance reporting software. There are, however, some portions of a compliance reporting template that are less technology-laden, and that are governed by things that computers would have a difficult time assessing, such as the priorities of your company in compliance.
One important part of analyzing the results of a compliance reporting template run is the process of identifying, assessing and prioritizing risk. A risk assessment most often consists of a chart. The chart will have categories, such as the group affected by a certain measure of compliance.
For example, the human resources department would be allocated risks such as sexual harassment claims and hiring violations, whereas the information technology department would be the group affected by cybersecurity breaches or improper use of data by business partners. There are many more departments and risks, but the bottom line here is that the generic risks that we could list here will not be universally applicable.
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Once the risks for each department are listed, there is a twofold analysis that should take place. The first one is the impact. The impact can be quantified in a number of ways, but the easiest one may be to assign a numerical value on a scale of one to five, with five being the most impactful risk. For example, a media company would likely rate sexual harassment claims as a four or a five, since there have been many recent exposés on company culture, such as claims about workplace harassment at Vice. The way the impact is understood tends to be variable, as it can be quantified by the amount of monetary damages a violation might cost, negative publicity and the list goes on.
Again, the point is that these list analyses will be tailored to the specific business of your company to have the most accurate, applicable results. The other factor is frequency, which is simply a variable to combine with impact that will account for how often the risk arises. Together, these can provide a good picture of how much to weigh each risk. When combined with the outcome of an automated compliance reporting template result from a compliance reporting software system, this will allow your company to mitigate risk by knowing where there are fixes needed, and which fix is most important to install first.
This is a two-pronged approach, one that will integrate technology with an intimate knowledge of the ever-changing needs of a business in order to offer a compliance risk solution that is agile, sustainable and effective. The right kind of regulatory compliance reporting template solution is one that will allow you to keep up with the changing legal demands placed on each sector of your business by administrations and jurisdictions that vary across time and space. This can best be managed by automated processes, such as those available in compliance management platforms. Once you have chosen the right compliance management platform, consider how you are managing your entities as a whole. Although they are not necessarily the same, the two are inextricably linked, and for good reason.
Leveraging a systematic approach
Documents are the lifeblood of a corporation and should be managed with a powerful solution that brings the best of a company that has a wealth of experience in entity management solutions, a well-known clientele and a down-to-earth approach, with dedicated teams of service professionals. Consider a suite of tailored entity management tools to help guide you through the labyrinth of entity management, especially as it relates to compliance and risk. If this interests you, please don’t hesitate to call or email us today.