Corporate Compliance: What is it And Why it’s Important

Corporate compliance—it’s one of those terms that gets thrown around a lot, but what does it really mean, and why should businesses care? For many organizations, compliance feels like a checklist of rules to follow, but in reality, it’s so much more. 

Corporate compliance law is the systematic approach companies employ to ensure adherence to relevant laws and regulations governing their operations. 

In fact, businesses across various sectors have faced penalties ranging from $100,000 to over $1 million for failing to meet compliance standards. From HIPAA violations in healthcare to data privacy breaches in tech, the stakes are higher than ever.

This blog will break down what corporate compliance is, why it matters, and how a robust compliance program not only shields your business from legal risks but also promotes ethical practices and long-term growth.

What is corporate compliance?

Corporate compliance is a framework that ensures a company adheres to applicable laws, regulations, and industry standards. When compliance protocols are enforced, businesses can prevent and detect violations while safeguarding the organization from potential fines, legal actions, and reputational damage.

This approach starts with designing, implementing, and monitoring various practices, procedures, and training initiatives to uphold legal and ethical standards across all aspects of your company’s activities.

For example, if you are a healthcare organization or a company that deals with healthcare businesses, you must be HIPAA compliant, as it is a mandatory regulatory requirement.

This is what Fabien Weber, a vCISO, had to say about compliance in general:

Importance of corporate compliance

The importance of corporate compliance cannot be understated because when you are compliant with the regulatory standards of your business, it promotes transparency, accountability, and fairness in your firm’s operational practices. 

This, in turn, will enhance your reputation and credibility as an organization among the public and clients alike. 

Here are a few more crucial reasons you need to implement corporate compliance:

1. To avoid legal penalties and fines

You must prioritize compliance to avoid legal troubles and hefty fines. A single instance of non-compliance can damage your company’s cash flow and may require a resource-heavy approach to rectify. 

Being legally compliant means knowing the relevant laws for your business and diligently applying them in all aspects of your operations.

2. A positive image of your business

The public perception of your company plays a huge role in its success. Any legal issues or lawsuits can damage your company’s reputation, eroding trust among the public.

3. Helps in the retention of employees

Corporate compliance is not just a regulatory burden but a vital component of a thriving organization. When you prioritize compliance, your company essentially gets benefits in two ways.

• First one is the employee satisfaction that arises because of the initiatives companies take to create policies, procedures and protocols through compliance training
• Second, compliance helps prevent data breaches. Employees learn how to handle sensitive information properly, reducing the risk of security problems. This gives the company stability in the long run.

How to create a corporate compliance program?

Compliance programs are not a one-size-fits-all solution. Many factors come into play, and you’ll need to develop a plan that can address all the necessary elements. 

With that being said, here are some steps you need to take to build an effective compliance program as a leader:

1. Set clear goals, objectives, and checkpoints

The first step is to define the purpose and objectives of your compliance program. Determine what regulations and standards apply to your organization and establish measurable goals for compliance.

For example, if you are a healthcare business, then HIPAA is a must. Or if you’re dealing with European clients, then GDPR is a must.

2. Assess the current scenario

Conduct a thorough assessment of your company’s current compliance practices, including policies, procedures, and controls. Identify any areas of non-compliance or potential risks.

One of the best ways to do this without spending too much time is to automate the process. Invest in corporate compliance software like Sprinto. It will help you set up all the predefined controls, automated workflows, real-time monitoring, and alerts for anomalies.

This way, you’ll always be aware of your current security scenario.

3. Get stakeholder/BOD input

The next step in rolling out a compliance program involves your board of directors and senior executives.

Your board of directors and senior leadership are the most important people in the process of successfully implementing an ethics and compliance plan. In the very beginning, obtaining sufficient human and financial resources may need to be prioritized.

Also, they should focus on promoting the company’s long-term success, defining its purpose and values, and strategizing for the future. 

They should also ensure the company has the necessary resources to achieve its goals, engage effectively with shareholders and stakeholders, and establish workforce policies aligned with its values.

4. Create policies and procedures (mapped to frameworks)

The next step is to create written policies, procedures, and standards of conduct for your compliance program. 

Having a policy and procedure manual offers several benefits to your organization, from promoting compliance with laws and regulations to helping mitigate risks and conflicts.

However, make sure these written policies are easily accessible to all employees. Regularly review and update the policies to keep them relevant and effective.

5. Roll out policies and train employees

Now that you have all the policies and procedures in place, it’s time to educate your employees on compliance with cybersecurity and other regulations. 

After all, compliance is useless if your employees don’t adhere to them. Make sure that every team member is well acquainted with the basic cyber knowledge so that you can be compliant without any roadblocks.

6. Run frequent internal audits

Running frequent internal audits provides an opportunity to assess your organization’s current compliance status, identify any gaps or risks, and ensure alignment with regulatory requirements. 

It helps you avoid the risk of costly issues in the future. Also, staying in line with internal audits helps your company stay updated with the changing compliance regulations and reduces the likelihood of regulatory penalties or fines.

7. Monitor and improvise

Compliance is a task that requires ongoing attention. Regularly monitoring and auditing your corporate compliance policies, standards, or compliance programs are crucial. These review processes evaluate your commitment to compliance efforts, as well as their adequacy, efficiency, and effectiveness.

Sprinto is designed to keep you on track. It integrates with your systems to automatically map and monitor controls against industry standards like SOC 2 and ISO 27001.

See this video to know how continuous monitoring works if you implement Sprinto:

It tracks compliance, collects evidence, and initiates remediation workflows around the clock every day of the year. With Sprinto, compliance maintenance becomes effortless and efficient.

8. Initiate corrective actions

Now that you have all the important measures in place and a continuous compliance management platform to monitor your network, you need to have a plan in place to initiate corrective actions.

You need a well-defined corrective action plan outlining steps to rectify compliance issues and gaps in compliance. The plan should be S.M.A.R.T.—specific, measurable, attainable, relevant, and time-bound—incorporating clear timeframes, costs, and responsible parties.

This way, you can mitigate risks and ensure ongoing compliance with ease.