Keeping up with constantly changing regulations is one of the biggest compliance challenges businesses face today. Laws and industry standards seem to be in a perpetual state of flux, making it difficult for companies to stay compliant. Some of the most common compliance struggles modern businesses encounter include:
Increasing Regulatory Complexity
Regulations continue to grow more complex, making compliance an increasingly complicated and costly endeavor. Even experienced compliance professionals struggle to keep up with new rules and legal modifications. Key regulations that often create compliance headaches include:
- Data privacy laws like GDPR and CCPA, which carry strict data handling and disclosure requirements.
- Industry-specific regulations like HIPAA for healthcare, PCI DSS for companies processing payments, and SOX for public companies.
- Labor and employment regulations including federal and state laws related to hiring, pay, benefits, and discrimination.
Staying on top of these intricate regulations across functions like legal, IT, HR, and finance is an arduous task for today’s businesses, even for voluntary compliance standards like SOC 2.
Data Security and Privacy Demands
With cyberattacks and data breaches on the rise, businesses are under intense pressure to protect sensitive customer and employee information. Adhering to expanding data privacy regulations can require updating data handling systems, employee training, audit procedures, and more. Investing in security and privacy is essential but comes with substantial cost and effort.
Third-Party and Supply Chain Risk
Many companies rely heavily on third-party vendors, suppliers, and partners. Yet businesses are still responsible for compliance shortfalls within their supply chain. Conducting rigorous, ongoing due diligence on third parties is vital but time-consuming. Supply chain compliance must account for risks related to information security, data localization, anti-bribery, and more.
Inconsistent Compliance Standards
For global enterprises, varying compliance demands across different countries further complicate matters. Privacy standards, environmental regulations, and financial rules often differ significantly between jurisdictions. Tailoring compliance programs regionally while maintaining governance adds another layer of complexity.
Limited Resources and Bandwidth
Despite extensive compliance responsibilities, many compliance teams are understaffed and underfunded. With limited bandwidth, it’s tough for businesses to get a handle on their overall compliance risk exposure. Hard choices must be made regarding which initiatives take priority. Adding headcount can help but is expensive.
Partnering with Experts
Seeking guidance from legal counsel, auditors, and compliance consultants is essential for businesses struggling to manage evolving regulations. External experts can provide direction on higher-risk areas, technology solutions, process improvements, and training. However, these specialists add more costs on top of internal compliance budgets.
Automating Compliance Processes
Automating compliance-related workflows using specialized software can help ease the burden on compliance professionals. Automation around policy management, risk assessments, audits, employee training, and incident response streamlines compliance efforts.
Achieving compliance amid the current regulatory landscape is a multifaceted “chess match” for today’s business leaders. Fines and reputational damage for noncompliance make it a necessity rather than an option. Partnering effectively with legal counsel and dedicating appropriate resources is critical to compliance success. With vigilance and commitment, even the most complex mandates can be translated into policies, procedures, and controls that allow companies to both follow the rules and fuel growth.