Data breaches and cyberattacks are not just IT issues. They can cause reputational damage, financial damage, and business disruption. Data theft can have various data privacy and legal implications for companies. In fact, according to IBM, the average company’s data breach cost is expected to reach up to $4.45 million. Therefore, compliance risk assessment services are essential.
Introduction
Compliance programs must be tailored to the requirements and complexities encountered by every company and detailed enough to address all of the risks the organization has pinpointed.
A good risk evaluation should start with an in-depth picture of the compliance scenario of your company’s functions. The main questions are:
- Where are you conducting your business?
- What rules cover companies like yours?
The most significant thing is that your compliance efforts must be aimed directly at the risks that are most important to your company.
An effective compliance risk evaluation must entail a clear picture of your company’s operations. In addition to this, you need to know the “how, when, where, what, and who” of the daily operations occurring on the company’s grounds.
Therefore, we are presenting to you a five-step framework for compliance risk assessment.
Understand The Present Condition of Affairs
Try to look for what currently exists. Learn about and list down the company procedures, transactions, and systems. Perhaps, it is possible to look for the current business procedures materials prepared for contract certification aims. In addition, you also want to take the opportunity to meet important people and comprehend what stresses and motivates them.
List down the possible Contact Points That Are Present In Your Company
Once you have a detailed picture of your company’s operations and the compliance landscape your company operates within, it’s time to identify the compliance risk contact points or specific company operations that present the potential for violating applicable regulations.
You can pinpoint these pain points by assessing every key process, recurring transactions, and systems pointed out in the previous step in terms of complexities or queries linked with the regulatory administrations you want to follow.
Evaluate The Present Controls In Place To Detect, Prevent, and Rectify Violations
Are the current controls and processes at your company effectively resolving the risk contact points you pinpointed? For every risk link point, pinpoint the particular policy, process, work instruction, or any other control that is implemented. You should evaluate the abundance of these controls in the context of your information about every contact point.
Consider the chance that a defilement will take place given the present control, whether such a defilement would be identified, after identification, what the worst possible effect of violation would be.
The pain points are not sufficiently addressed by the present compliance program issues that are required to be resolved.
Determine and Rank The Compliance Improvement Measures You Adopt
Probably, your organization won’t have the resources to handle each compliance risk at once. You must rank gaps in your program in terms of risk criticality and the resources needed to remediate them. You will want to allocate additional resources to identifying high-risk areas in comparison to low-risk areas.
After prioritizing the compliance opportunities for your company, you must pinpoint projects to resolve them systematically. You must pinpoint the compliance improvements that will produce the majority of benefits for your organization.
Periodic Update of Your Compliance Risk Assessment
It is important to note that a risk evaluation should not be a one-off event. At this stage, the company must assess whether the risk evaluation of the company is present and is assessed periodically.
Conclusion
Events like acquiring new companies, migration into the latest sectors and geographical markets, engagement, corporate reorganization with the latest regulators and customers will raise various sorts of compliance risks. In other words, regulatory changes and the way enforcement authorities explain these risks can develop the latest compliance risks. It is significant to apply a deliberate, recurring procedure to periodically upgrade your risk evaluation.
Frequently Asked Questions (FAQs)
What is meant by compliance risk assessment?
Compliance risk assessment services are specialized services that help organizations identify, assess, and mitigate compliance risks associated with laws, regulations, and industry standards. These services enable organizations to proactively manage compliance risks, reduce the likelihood of non-compliance, and avoid potential penalties and reputational damage.
What are the benefits of compliance risk assessment?
- Financial institutions
- Healthcare companies
- Corporations
What are the types of compliance risk assessment services?
- Regulatory compliance
- Industry-specific compliance
- Internal compliance
