With the introduction of an integrated and centralized Compliance Management System or CMS, the areas of highest risk and cost to the business are flagged more quickly and consistently, allowing them to be addressed as a priority. Management can glance and identify the high-risk areas and the frequency. This ensures that they are able to act more quickly and consistently than before.
The cost of non-compliance is high and in worst cases, serious damage to corporate reputation and goodwill can also be caused. This of course ultimately is reflected negatively on the balance sheet. In contrast to this, if the compliances are systematically managed in an efficient manner, it contributes to the company’s profitability.
To understand this, it is first important to understand the benefits of handling the compliances in an effective and diligent manner. Following are the benefits of an effective CMS system:-
Risk management refers to a set of frameworks and methodologies through which an organization identifies, analyzes and reacts appropriately to risks that might adversely affect its vision and objectives. It also helps in proactive identification and mitigation of risks that the organization faces on an everyday basis. The most effective and efficient compliance management system are the ones that are fully integrated into a broader risk management program, helping in mitigating these risks effectively.
A good compliance program should help prevent errors or failures before they occur or detect them at an early stage, which reduces the need to repeat or re-do tasks resulting in improved productivity and efficiency.
An effective Compliance management system results in better productivity, ultimately resulting in greater efficiency. A defined audit lifecycle and automation helps in reducing cost and saves time. Greater efficiency and productivity contribute to better performance and increases profits.
4.Trust and Brand Loyalty:-
Having in place an effective and broadly communicated compliance management system helps in signaling to key stakeholders that compliance is a top priority for the company. It shows one’s commitment to doing business the right way and to the highest ethical standards. Also, it demonstrates an expertise related to all relevant laws and regulations. Customers, employees, and vendors seeing this commitment have a higher overall feeling of trust which breeds in brand loyalty.
5. Self - assessment:-
Performing self-assessment audits and identifying areas of non-compliance enables the management to analyze the overall performance better. All potential instances of non-compliance can be identified in a consistent way and targeted audit plans can be developed. It is helpful when the company has an overseas business or multiple locations.