Author: Tim Cummins
Non-compliance is risky. It leads to fines, job losses, reputational damage, lost sales. Since it is so important, businesses make substantial investments to reduce the chance of breaches – and of course a major element of those investments is people: reviewers, approvers, auditors, compliance experts.
The problem with those resources is that their jobs depend on complexity and, to a degree, their belief that the natural tendency of others is to be non-compliant.
Compliance experts are not generally innate optimists who assume that human nature is inclined to ‘doing the right thing’.
As the volume of regulation grows, traditional control methods are too slow, inefficient and erratic – not to mention the issue of affordability.
They have to be simplified – and that demands new thinking and new measurements of success for compliance experts.
Two of the emerging approaches are:
1. Outsourcing the basic checking process and collection of data. An example is in the area of supplier validation and monitoring, where there are now a variety of external providers offering a service that eliminates the need for individual companies to run checks. This single point of collection obviously reduces workload and cost for both customers and suppliers.
2. Use of technology. A number of exciting solutions are emerging. Recent trials of blockchain have included automation of data collection from a range of internal and external sources, automating supplier validation and contract award, then monitoring continued compliance through feeds from public or fee databases. Another method is through the use of apps or bots provided to users so that they better understand compliance requirements and input data that supports self-monitoring or automates approvals. A third example is machine-based checking – for example, ensuring that proposed contract terms align with policy and highlighting any exceptions, which are then routed for review.
By improving data flows, compliance teams are also becoming far better equipped to identify the likelihood of specific risks, enabling them to focus (and be measured) on specific mitigation measures for those with the highest frequency.
Managing compliance is a clear obligation; competitive advantage comes from expert teams that focus on how to do it better, faster and cheaper.
Read more from Tim Cummins on the Committment Matters website.
Tim Cummins is CEO of the International Association for Contract & Commercial Management (IACCM), a non-profit organization that he founded in 1999. Read more here.