When it comes to the formation of a company, rules and regulations are also set accordingly to be followed as structured for the betterment of the organization. This applies to both established as well as start-ups. Different rules are set for different departments well as scenarios which become a mandate for all the employees to follow. An organization needs to keep a check so as to identify whether the rules are met accordingly as structured or not. This is the turning point where regulatory compliance comes into the picture. This article will give you an overall idea regarding what regulatory compliance service is all about. Let’s proceed…
What Is Regulatory Compliance?
In simple words, we can say that complying with the standard regulations set by a company is known as regulatory compliance. Proposed in 1972, it turns to be an essential part of any organization and can’t be skipped. Following the regulations set accordingly helps to maintain a positive work environment as well as good relations with the company stakeholders. Now, to understand it in a better way, let’s understand its role followed by importance.
What Are the Roles and Responsibilities of Regulatory Compliance?
To supervise the rules and regulations set by an organization, the Regulatory Compliance Management performs three line of defense. Let’s have a look at them.
1st line of Defense | Management Assurance
- Assist in setting and executing strategies
- Provides direction and guidance
- Promotes a strong risk-culture and develop sustainable risk-return thinking
- Develops strong compliance culture
2nd line of Defense | Risk Management, Legal and Compliance
- Develop a formal, robust framework with organizational policies
- Interpret the regulatory compliances requirements
- Regular monitoring of risk, and legal compliance
- Keep a check on the 1st line of defense
3rd line of Defense | Internal Audit and Other Independent Assurance Providers
- Overall adequacy and effectiveness of governance
- Keep a check on the risk management and internal controls
- Provide assurance on the effectiveness of mitigation plans
- Manage organizational risks
Why Is Regulatory Compliance Important?
Since regulatory compliance contributes to maintaining a healthy environment, its importance can be understood as we go through the following points:
- Business relationships are healthy when a framework is followed
- Regulatory compliance helps to build strategies regarding risk management
- It improves the overall health of a business entity
- It strengthens the litigation process
The aforementioned benefits are crucial for any business. It strengthens the core foundation as well as streamline your business functions. Another aspect you must be wondering is what if you don’t adhere to set regulatory compliance in your organization. Well, let’s have a look at the answer to your question.
Outcome of Non-Compliance
Non-applicability of Regulatory Compliance could lead to the following:
- Penalties and fines, and can level-up to imprisonment
- Withdrawal of licenses
- Litigation and reputation risk
- Severe impact on organizational sustainability
- Lack of good corporate governance
- Difficulties in business valuation
Now, you can have a wider view as to why regulatory compliance is important. In order to avoid the above-mentioned outcomes, it is a must that your business should hold the compliance ground. If you are planning to step ahead, it is recommended to have a word with a consultant who can help you in establishing the service in your firm. We at JAXA are here to provide you the same. Our experts will help you to necessitate the regulatory compliance services. Contact us to initiate the next steps. We’d be glad to assist you.