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How can I be compliant at a reasonable expense?
Why does compliance cost so much? While the cost of compliance has escalated due to the ever-changing regulatory landscape, which can often mean a ripple effect of change across the business, there are solutions that enable organisations to reduce these costs.
Taking a closer look at what these costs comprise of and how expenditure can be optimised will provide companies with a greater return of investment.
“Compliance costs can be defined as the cost to an organisation of performing the tasks necessary to comply with regulatory legislation,” says Karmil Govender, industry compliance officer and LexisNexis contributing author. “This includes salaries of people working in compliance and the cost of new systems required to meet obligations and industry regulations.”
However, responding to regulatory policy changes or revisions results in additional work aside from implementing and updating the protocols directly impacted. Communicating changes to staff and clients, providing training, implementing and monitoring – and reporting on plans - as well as the maintenance of comprehensive audit controls to show compliance - are all parameters affected by regulatory changes.
“In a country such as South Africa, where democracy is still relatively young, ongoing regulatory change is to be expected. This, in addition to the impact that technology and innovations such as cloud computing have had on the access to information and how organisations conduct business, has served to increase the growing complexity of statutory regulations and necessity of compliance and enforcement,” says Govender.
Globalisation, social media and enhanced consciousness of business and governmental actions resulting in a demand for accountability and transparency have also created additional pressure on organisations. This spin off of this is the need for both diligence and cost cutting from management to meet the expectations for a socially and environmentally compliant product or service that remains cost effective.
“The task of remaining abreast of regulatory changes, undertaking the necessary actions from the of training staff to implementation of changes in the operations process, amending policies and guidelines, is time consuming and can involve many individuals in the business.
Addressing the following parameters will assist compliance officers to reduce costs without compromising on effectiveness in their compliance programmes:
- Look ahead and plan accordingly
Ascertain the goals and direction of your organisation and ensure that compliance systems implemented speak to that vision - at present and in the next five to ten years. Ensure that any system implemented is scalable to allow for growth without the complete re-visitation of the compliance programme.
- Be proactive not reactive
Implementing a proactive approach to compliance requires keeping an eye out for impending changes in the industry and in legislation to be able to implement the necessary legislative requirements timeously and effectively.
“Online platforms such as Lexis®Assure from Lexis Nexis South Africa offer compliance officers the option to select their regulatory universe to provide only industry relevant alerts and data,” says Govender. “These alerts are invaluable, providing compliance teams with advance notice of imminent regulatory changes.”
Accessing reliable and accurate insights from a team of legal experts and product authors reduces the time spent keeping abreast of regulatory changes. “This allows compliance officers to shift focus towards implementation – the guidelines for which, along with checklists, are integral to the product offering,” says Govender.
- Automation of processes
Subscribing to technological solutions is an effective way to manage risks and automate tasks. Saving time and reducing the inevitable human error component of manual systems, automation also needs to be scalable which will lead to long term time saving.
“Using a combination of technological platforms and a strategic approach to compliance as a function for growth rather than as a watch-dog role, designing a system which keeps your organisation abreast of regulations while planning for the future will assist in keeping compliance spending in check,” says Govender.
For further information visit: https://www.lexisnexis.co.za/governance-risk-and-compliance/grc-system