There are many well defined components of business compliance programs, and it takes a lot of responsibility and diligence to make sure every level of your business is operating in accordance with the law. Between the constantly changing laws, rules, and regulations, it can seem like a daunting task putting together a compliance strategy that will protect your business. This is especially true if you aren’t familiar with some of the common components of a compliance program, such as risk assessments, standards and controls, codes of conduct, employee training, and communication.
Risk assessment is the cornerstone of a compliance plan. In this phase, an audit is performed to determine a business’s risks and liabilities. This is an absolutely crucial component because it identifies threats to your company. Ignorance isn’t always bliss, and what you don’t know can hurt you. Without proper identification of threats, you cannot possibly defend your business. Additionally, some risks are a greater threat and a higher priority than others. Each threat needs to be evaluated and prioritized to ensure each risk is dealt with accordingly. Common adverse consequences of unidentified risks include:
- Corporate probation
Standards and Controls
After the risks have been identified, the next step is to create policies, standards, and controls designed to prevent risky or unethical behavior. Generally, three policies are created:
- Standards and Policies
- A Code of Conduct
- Standards of Procedures and Best Practices
The goal is to create an internal infrastructure of rules and procedures that safeguard your business from the ravages of liability. Furthermore, well-defined procedures can help optimize and fine-tune business processes to keep your business running like a well-oiled machine.
Code of Conduct
A code of conduct (sometimes called a code of ethics) is a document that helps employees and agents make decisions and use judgment that is aligned with the values, ethics, and goals of an organization. This document can help create a morally responsible image for an organization, and has the power to cast an organization in a positive light to the community as well as your clients.
Identifying risks and creating internal policies doesn’t add value to your business if they are not communicated to your employees. In the end, training and communication essential so that employees understand the business’s expectations as well as the consequences of their actions should they fail to follow procedures. There are different communication and training options depending on the size of your organization, but it is common to utilize e-learning systems that explain the compliance plan to employees. The bottom line is that the employees actually need to learn how to carry out the policies created to prevent risks.
There are many other components to a successful compliance program, but risk assessments, standards and controls, codes of conduct, employee training, and communication are pillars that most compliance strategies are built upon. If you aren’t sure if you need a compliance program, it is well worth a short phone call that could save your business from perilous risks and massive setbacks.
Contact the Compliance & Competition Consultants, LLC for a free initial Consultation at 847-431-8207.