Importance of Compliance Monitoring for Businesses

With the industry's highly variable compliance regulations, keeping up with the changes and maintaining a reputation by adhering to regulations hinges upon the effectiveness of compliance monitoring.

A compliance monitoring system includes several key elements, such as clear policies, regular audits, compliance software, employee training, and a reporting mechanism. Together, these components help organizations avoid non-compliance, improve efficiency, and ensure adherence to all applicable regulations. But how do you develop a good compliance monitoring system?

We'll explore the essential features that make compliance monitoring effective and see how BPRHub can help businesses streamline this process.

What is Compliance Monitoring? 

Compliance monitoring is the ongoing process of ensuring that an organization adheres to all relevant laws, policies, and internal and external regulations. This includes the day-to-day surveillance of business activities to identify potential risks that will help address issues before they escalate, thus avoiding penalties. 

It is one of the most critical aspects of a compliance management system, as it ensures the protection and privacy of data while regularly monitoring the progress of meeting regulatory compliance standards. Given that it is completely an organization's responsibility to set up its own compliance monitoring program, one might wonder: What are the key elements of a good compliance monitoring system?

A robust compliance monitoring system includes components that are focused on risk assessment and evaluation to avoid areas of non-compliance. They are:

• Clear policies and procedures: To define the regulations the company must follow and offer guidance to employees
• Regular audits and assessments: Helps to identify any gaps in compliance and pinpoint areas of risk
• Compliance management software: Plays a vital role in compliance monitoring by providing tools like automation and real-time tracking that enable continuous monitoring and generate audit-ready reports.
• Training and education programs: To ensure staff stay informed about regulatory updates and reinforce the importance of compliance. 
• Reporting mechanism: To identify violations, ensuring they are promptly addressed to avoid penalties or reputational damage.

Together, these components form the backbone of a strong compliance monitoring system.

Importance of Compliance Monitoring

Compliance monitoring plays a crucial role in safeguarding businesses from legal, financial, and reputational risks. The price to pay for non-compliance can be staggering, with fines for violations reaching millions of dollars. For instance, in 2023, TikTok faced a €345 million fine for GDPR violations, highlighting the severe penalties that can arise from non-compliance.

Hence, any industry you indulge in requires you to meet specific regulatory requirements at any cost. Effective compliance monitoring ensures that businesses meet both local and international regulatory requirements.

Compliance monitoring is an essential part of business that safeguards you against financial and reputational damage caused by non-compliance and ensures your business operates within legal, regulatory, and ethical boundaries. 

Some of the other benefits of compliance monitoring are:

• Early identification of risks: Helps spot potential compliance issues before they become larger problems.
• Improves operational efficiency: Streamlines processes by identifying gaps and ensuring policies are consistently followed.
• Enhances accountability: Promotes a culture of responsibility where employees understand and follow regulations.
• Facilitates regulatory reporting: Simplifies reporting to regulatory bodies, ensuring transparency and accuracy.
• Supports long-term growth: Ensures sustainable business practices by reducing risk and fostering steady development.
• Maintaining reputation: This helps to verify a strong compliance program is in practice in the organization, which will improve your reputation in the market.

What Are the Challenges in Compliance Monitoring?

Compliance monitoring presents several challenges for businesses, especially in today’s fast-paced regulatory environment.

• Limited resources and expertise: Smaller organizations often face difficulties in allocating the necessary resources for effective compliance monitoring. Compliance efforts require substantial financial, human, and technical resources, which can be challenging for businesses with limited capacity.
• Employee adherence and accountability: It is difficult to ensure that all employees consistently follow compliance policies. On top of that, unclear roles and responsibilities can lead to oversight. As no one is taking responsibility, the risk of non-compliance will increase. Employees and managers are accustomed to prioritizing compliance.
• Keeping up with regulatory changes: Constantly evolving regulations can overwhelm compliance teams, making it difficult to stay current. Compliance monitoring requires understanding and adhering to a range of international, national, and regional standards, making it particularly challenging for businesses operating across multiple jurisdictions.
• Manual processes: Compliance monitoring consists of handling and analyzing large volumes of data that can be highly time-consuming, primarily when relying on manual processes. Traditional compliance management is susceptible to errors and inaccuracies, which can often result in missing compliance obligations.
• Difficulty in technology integration: Implementing a compliance monitoring program requires integrating various business systems, such as compliance software, data analytics, and reporting tools. However, compatibility issues between APIs and different data formats can lead to challenges like data inaccuracies, duplication, and costly integration processes.

What if there was a way to solve all these challenges at once? 

This is where the cloud-based compliance management software BPRHub comes in handy. It has a Documentation hub that maintains hectic documentation and a large volume of data, an Audit Hub that centralizes audits to ensure continuous compliance, and a Standard Hub that helps monitor the status of multiple standards all at once.

To learn more about upgrading your compliance monitoring process, get a free consultation with BPRHub.

How to Develop a Compliance Monitoring Plan? 

Creating an effective compliance monitoring plan involves several key steps and the right team to implement it. Let’s review the different steps.

Step 1: Compliance Risk Assessment

It is essential for identifying, evaluating, and mitigating potential risks that could lead to non-compliance with laws and regulations.

• Identifying applicable regulations: Review existing internal policies and procedures that your business must adhere to so that you can identify the gaps. 
• Risk evaluation: Evaluate the level of risk associated with each regulation based on factors such as operational complexity, geographic location, and industry-specific rules
• Prioritize the risk: Once risks are identified, prioritize them based on their potential impact on the business, such as legal penalties, reputational damage, or operational disruption.

Step 2: Establish Monitoring and Testing Strategies

Proactive monitoring and testing enable businesses to identify compliance gaps early, ensuring alignment with regulations. Monitoring focuses on overseeing business activities to confirm regulatory adherence, while testing evaluates the effectiveness of compliance controls. 

What are the regular testing strategies?

• Regular internal reviews and data analysis: Helps identify potential compliance gaps before they become significant issues. 
• Automated tools: To enhance monitoring by providing real-time alerts when issues arise.
• Simulations or mock audits: Ensure that the systems in place are functioning correctly and can handle any compliance risks. 

Incorporating these strategies into the monitoring program strengthens compliance by proactively identifying risks. Regular internal reviews and data analysis help uncover gaps early, while automated tools provide real-time alerts. Simulations and mock audits ensure systems are functioning as intended, creating a robust compliance framework that can quickly adapt to emerging regulatory challenges.

A strong compliance system requires an efficient compliance monitoring tool that provides real-time updates on different standards. 

One such tool is BPRHub with its salient feature Standard Hub, that helps businesses maintain an up-to-date repository of all relevant standards. It integrates various international and domestic standards by centralizing its management into a single-use-friendly platform.

Step 3: Implement Corrective Actions

Once a compliance gap or violation is discovered, businesses must act quickly to correct the issue and prevent future occurrences. This involves identifying the root cause of the problem, developing an action plan, and assigning responsibilities for resolution. 

This includes:

• Updating internal policies 
• Process improvements
• Additional employee training
• Restructuring compliance workflow
• Tracking the effectiveness of each action

Step 4: Develop Clear Policies and Procedures

To implement corrective actions after identifying compliance risks, you need to create clear policies and compliance procedures that address the identified compliance issues.

Policies help to establish the rules and guidelines that employees must follow to ensure the organization adheres to legal, regulatory, and ethical standards. Procedures, on the other hand, provide detailed instructions on how to implement these policies in day-to-day operations.

What to look for when developing policies and procedures.

• Ensure they are aligned with industry regulations
• It should be tailored to your business’s specific needs.
• It should be easy to understand and accessible to all employees.
• It should be well-documented and up-to-date. 
• Regularly review them to keep up with business operations.

Developing policies and conducting training programs require a lot more documentation than you foresee. Manually complying with and maintaining documents can be a hectic task. BPRHub’s Documentation Hub provides a better alternative for efficiently organizing and retrieving your documents. 

Step 5: Build Awareness Through Employee Training

Effective compliance monitoring requires collaboration across departments and individuals to ensure new policies and procedures are properly implemented, paving the way for organizational compliance. Regular training programs facilitate this collaboration. They help employees stay updated on new laws, industry standards, and internal protocols, reducing the risk of accidental violations. 

Criteria for an effective employee training program:

• It should be clear, accessible, and relevant to each employee’s role
• Focused on practical applications of compliance requirements in their daily tasks
• Should be conducted regularly 
• Should incorporate all relevant employees, including senior management and first-line employees
• Conduct proper assessments to reinforce understanding and accountability.

Step 6: Conduct Regular Compliance Audits

To ensure the ongoing effectiveness of your compliance efforts, it is essential to follow up employee training with regular audits. This process involves a thorough examination of the organization’s operations, procedures, and practices to identify any areas of non-compliance or potential risks. Audits can be conducted internally by compliance officers or externally by third-party auditors.

Regular audits ensure that policies are followed, gaps are identified, and corrective actions are promptly taken. They also provide a historical record of compliance activities, which can be shared with regulatory authorities to showcase accountability and demonstrate your commitment to compliance.

Conducting audits regularly is mandatory in identifying non-compliance areas of an organization. If you are looking for a tool that consists of different audits, look no further. BPRHub’s Audit Hub feature will help you enhance the compliance process by providing all types of auditing.

Step 7: Keep Compliance Aligned with Regulatory Changes

Compliance policies and monitoring plans must be regularly reviewed and updated to reflect regulatory changes, business operations, and technological advancements. Compliance is a moving target, requiring a flexible and current monitoring program to address evolving risks. 

Failing to update your plan can cost you a lot. Regular updates ensure transparency, reduce risks and build trust with stakeholders while keeping the business compliant with new guidelines.

Who is Responsible for Monitoring Compliance in a Company?

The responsibility for monitoring compliance in a company is shared among various individuals and departments, as it is a collaborative approach. Depending on the company, this process may be handled by an in-house team or overseen by a third-party consulting firm. 

Regardless of the approach, both employees and management must be actively involved throughout the compliance monitoring process. Regular compliance training is essential, as studies show companies providing such training experience a 50% reduction in violations. Additionally, a survey found that 75% of senior executives believe their involvement significantly impacts the effectiveness of the compliance program.

While the compliance officer typically oversees the entire compliance program, today’s compliance officers are expected to be agile and adaptable. They are expected to act as strategic advisors who implement and leverage technological solutions to address compliance challenges. However, having a compliance officer is not a legal requirement.

There are different ways to classify the responsibilities to mitigate confusion. They are:

• Management teams: They set the tone of accountability and conduct occasional audits to ensure policies are enforced and employees adhere to the regulations.
• Department heads: Monitor compliance within their specific areas, ensuring their teams follow both internal policies and external regulations.
• Employees: They should attend the training programs regularly and be responsible for understanding and following the company’s compliance guidelines. 

The Role of Technology in Compliance Monitoring 

Incorporating technology, specifically using compliance management or monitoring tools, helps businesses manage and track their compliance obligations more efficiently while minimizing the risk of human error. Let’s analyze how technology can reshape compliance monitoring.

Automation Tools

Automated tools like real-time compliance data integration, audit hub, standard hub, and document hub can handle routine compliance tasks, such as data collection, reporting, and auditing, with greater speed and accuracy. They also help you stay updated with the changing compliance landscape without any manual supervision, thus lowering the risk of errors while freeing up staff to focus on more strategic activities.

Real-Time Monitoring

Unlike traditional methods, it provides a constant, up-to-date view of compliance status and metrics, allowing businesses to identify and address issues as they occur. Recent studies have found that 80% of companies reported revenue increases after implementing real-time analytics across various use cases.

With tools like data analytics software and dashboards, organizations can monitor compliance in real-time and generate reports instantly. It can also help manage multiple compliances.

Data Integration and Centralization

Advanced compliance tools allow businesses to integrate and centralize data from multiple sources. Whether it's data from finance, human resources, or operations, compliance management software can consolidate it into one platform, making monitoring more accessible and efficient. 

Cost-Effectiveness

While implementing new technology requires upfront investment, it ultimately saves businesses money. In industries like IT, downtime costs an average of $5,600 per minute, with potential losses ranging from $145,000 to $450,000 per hour.

Technology proves to be a cost-effective solution for businesses looking to streamline their compliance monitoring processes by reducing manual labor, improving accuracy, and preventing costly compliance violations.

Why should you trust BPRHub for Compliance Monitoring?

Implementing a strong compliance monitoring system is vital for protecting your business from legal and financial risks. For this, you need the best compliance monitoring tool.

BPRHub is a cloud-based compliance management platform designed by industry experts in compliance and software development. It helps businesses meet regulatory standards by automating compliance processes and providing real-time compliance monitoring.

It offers centralized management for multiple standards, documentation, and audit processes, streamlining compliance efforts. Its dynamic mapping system organizes documents for easy access, while automated updates and real-time compliance checks keep all stakeholders informed and ensure adherence to the latest regulations. 

Break away from the constant manual surveillance required for compliance monitoring and explore the new technological landscape with BPRHub. Contact BPRHub to level up your compliance monitoring process.

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