When it comes to differentiating different compliance terms, the key is in the details.
There’s a lot of differing terminology within compliance. Different industries use different terms and they all answer to different agencies. But even with all these differences, some terms can seem a little too similar upon first glance.
In this article, we’ll look at regulatory compliance, how it differs from corporate compliance, and why you need it as part of your overall compliance strategy.
What is regulatory compliance?
Regulatory compliance is when a corporation follows state, federal, and international laws regarding its operations. It’s one part of the overall compliance structure.
Depending on your industry, the nature of the regulatory compliance you’ll face will vary. Some industries like healthcare and finance are subject to rigorous legislation, while other industries only have a few governing bodies to answer to.
The end goal of regulatory compliance is to give consumers the confidence they need when interacting with a business or purchasing a product. The consumer wants to feel as though the business they choose to interact with is following the law and practice adequate business ethics, and compliance measures allow them to do that.
How is regulatory compliance different from corporate compliance?
On the surface, it may seem like regulatory compliance and corporate compliance are interchangeable; but that’s not the case. While the two are very similar there is one key difference that separates them.
Regulatory compliance vs. corporate compliance
Regulatory compliance involves following legal mandates and legislation as directed by governing bodies.
Corporate compliance refers to the ways in which a company ensures they are following their own internal compliance structure.
The key difference is the requirement by law. Corporate compliance can vary from business to business because the regulations are set for the business by the business themselves. Oftentimes, a company will fold regulatory compliance requirements into their existing corporate compliance plan to streamline the process, but it’s not required.
Why is prioritizing regulatory compliance important?
Aside from the obvious importance of following the law, why else is regulatory compliance important? Here are just three reasons you need to make compliance a priority:
1. The regulatory landscape is constantly changing
Regulatory compliance isn’t something you can ignore in hopes that it’ll work itself out. The law is constantly changing and those changes impact the way we do business. Keeping your finger on the pulse of regulatory compliance will help you stay ahead of your competitors and ahead of any potential fines that might come your way.
Because the regulatory compliance landscape is constantly changing, it's important to keep your employees informed. A comprehensive employee handbook can help your team communicate expectations to all of your employees.
2. Noncompliance will cost you a lot of money
Speaking of fines. Within the last year, you’ve probably seen the stories of corporate data breaches that have cost companies millions of dollars in penalties and fines. If you think those astronomical numbers are reserved for corporate giants, you’d be wrong.
According to research done by Stratfor, the cost of corporate data and privacy breaches continues to rise.
“For organizations found liable, the cost of those penalties and settlements has increased from $10 million in 2014 to $270 million in 2018.”
The cost of a compliance violation isn’t based on the size of your company. It’s based on the severity of what your company did. That means even small businesses could be subject to large financial penalties if they don’t maintain regulatory compliance.
3. Compliance protects your company, your employees, and the consumer
Despite what you may think, compliance doesn’t exist to be a buzz-kill. The regulations and laws set in place are there to protect everyone involved. Compliance protects the consumer from purchasing unregulated products or doing business with shady companies. It also protects businesses from making preventable mistakes that could cost them money or endanger their employees.
|Related: Learn more about the types of compliance audits and why you might need them!
Who is involved in regulatory compliance?
The short answer: it depends on your industry and where you’re located.
There are countless organizations that oversee compliance. Regulatory compliance operates like the government, in that there are both state and federal laws and agencies. In some cases, there are international governing bodies that also weigh in on regulatory compliance.
The federal government alone has nearly 450 federal agencies on record that oversee different industries in some capacity. Those aren’t even including the various legislative measures that have been passed over the years to supplement various governing bodies.
|TIP: If you're looking for an example of regulatory compliance, read up on FISMA compliance.
How should you track regulatory compliance?
Technology is digitizing everything. The days of being able to securely lock your important documents away in a filing cabinet are gone. Innovations in technology are changing the regulatory compliance landscape faster than most people can keep up. There’s a lot that goes into regulatory compliance, which is why many companies invest in compliance software.
That’s why products like G2 Track are important for regulatory compliance. Even companies that employ a Chief Compliance Officer (CCO) can benefit from a compliance software solution to help them maintain contracts, update workplace regulations as laws change, and train employees on best practices.
Best of all? G2 Track can benefit everyone on your team:
It wouldn’t be fair of us to talk about risk management and compliance and then ask you to take a huge jump into purchasing a new software solution. That’s why we’ve made it free for anyone to sign up or request a demo for G2 Track, risk-free.
What are you waiting for? Click below to learn more about G2 Track.
Don’t take the regular old approach to regulatory compliance
When it comes to compliance, it pays to be proactive. Or rather, it will cost you if you fall behind. Don’t get stuck paying hefty fines on a preventable problem. Take the next step in fixing your compliance program by reading more on the G2 Learning Hub and checking out G2 Track.
Interested in learning more? Check out our article covering GRC and corporate governance.