It doesn’t matter what a company’s size or industry is, all businesses need to adhere to specific regulations and laws as a part of their operations. Regulatory compliance deals with a lot of guidelines that organizations must follow by law. For example, this might involve ensuring that employees have a safe working environment.
It can help to take a look at a definition of regulatory compliance in order to understand exactly what it is and how it can be different from other facets of compliance.
To put it simply, regulatory compliance is when businesses follow international, federal, and state regulations and laws relevant to their operations. There are even companies that can help with this – such as businesses that help with Amazon FBA customs compliance. It should be noted that specific requirements can and do vary depending on the type of business and industry.
Adhering to government laws can differ from other aspects of what’s known as corporate compliance – or adhering to specific internal rules and policies. For example, financial market regulations might differ from specific bank policies. While both of them are critical in order to ensure financial behavior, safety, and integrity in businesses, it’s also important to understand the differences.
Since the regulatory environment constantly evolves, the target for compliance is forever moving. You may come to find that just when you’ve achieved total compliance, the regulatory environment shifts in some way and you need to tweak the approach you take in order to remain compliant. Your business has to be adaptable or it can be put in jeopardy. This can make things extremely difficult.
If your business fails to comply, it opens the company up to financial liability and even potential lawsuits. This is why compliance is so critical. Regulatory compliance assists you with protecting the reputation and resources of your business. Consider the time it takes for it to build trust with vendors, prospects, and customers. Much of that depends on how the business behaves ethically.
Compliance is what lays the foundation on which the reputation of the company is built. There are times when all it takes is a single misstep with compliance and you can break the trust that it took years to build.
If you fail to be compliant, you may even risk the loss of access to certain parts of your customer base. As an example, if you have a medical business and fail to comply with HIPAA regulations, you might lose access to a variety of insurance companies and even risk losing your state license.
Finally, consider all of the time you’ll need for your business to spend following a violation of compliance, likemanaging an outbreak of E. coli linked to a grower you use or a security breach due to someone hacking into your database.
Regulations and rules are there for a reason. They assist with protecting your customers, your employees, and your entire business. Failure to adhere to the requirements for regulatory compliance can leave you open to risks that go beyond simple fines. As an example, regulations regarding security are in place to protect against things like breaches of data, those regarding finances protect against things like fraud, and regarding safety have been created to keep your employees safe.
These types of regulations haven’t been put into place to make the lives of business owners more difficult, even though a lot of the time they do. Instead, they should be viewed as a benefit to your business as well as to external and internal individuals.