Compliance simply means following established guidelines, specifications, or legislation in letter and spirit. Rules you follow in your house or those followed in schools or the complex tax requirements diligently addressed; all of them are compliances. And the risk of non-compliance means risk of penalty, punishment, prosecution and eventual loss of reputation.
Root of the rules, regulations & guidelines and hence the compliance stems out a person’s ability to distinguish between good and evil. They are a necessity when a group of unconnected people (not related to each other biologically) live together, so that they can live in peace and harmony.
What started as a simple set of rules to govern community for its collective good, now has evolved as a complex regulatory system. It has taken many generations for the current regulatory systems across the world to mature.
In today’s globalized world, the need for a robust & comprehensive regulatory framework is evident. Such a framework needs to balance expectations from diverse interest groups and also ensure that the rules & regulations formulated do not become a hindrance to ease of doing business. But, considering complex geo-political and economic realities and complexities of laws, rules & regulations are ever increasing. Considering this, being compliant with the law of the land has become an up-hill task for companies as well as individuals.
Compliance is a key business concern as the number of rules & regulations to be followed and hence the list of compliances depends on multiple factors. As companies grow & expand to multiple geographies rapidly and enter new industry verticals in order to achieve business goals, they are required to comply with complex mandatory legal requirements hand-in-hand.
Compliance requirements applicable to a company depends on the legal structure of the company, locations of operation, industry vertical, number of employees & contractors etc. Companies need to be vigilant about fully understanding the compliance needs and adhering to the same.
But, companies often struggle to stay compliant with the ever-increasing complexity of laws, rules, and regulations as most of the resources are focused on achieving the business results. However, when risk of non-compliance stings, it would be fatal. It is not just the penalties which the company needs to pay, but the real impact on the business would be due to the reputational risk.