An Entrepreneur’s Guide to Compliance
With today’s increasing cybersecurity threats, entrepreneurs are being forced to implement specific security measures by regulatory authorities. The result? An increase in business compliance costs over the last few years.
Organizations in different industries have to contend with various national and industry-specific regulations to avoid litigations. Examples of such regulations include HIPPA and PCI DSS compliance.
Cybercriminals are targeting all industries, and are using technology to hold businesses at ransom. For example, the 2017 election debacle between Donald Trump and Hillary Clinton brought to the forefront the damages that can result from unauthorized access to confidential data, such as email.
When it comes to businesses, compliance should be approached in a nonpartisan manner. A recent survey of small business owners revealed that 20 percent of them found government regulations too challenging to implement. Moreover, 47 percent of the respondents indicated that they struggle to keep up with changing government and industry regulations.
Data privacy and related security regulations are here to stay. Therefore, entrepreneurs need to find ways to adapt and make their businesses compliant. This requires adopting a “practical compliance” approach, i.e., striking a balance between mitigating business risk and allocating resources for compliance purposes.
What is Your Business’ Risk Tolerance?
Most regulatory requirements are devised as “one-size-fits-all” solutions. However, players in the same industry may face different challenges.
For example, HIPPA regulations cut across all healthcare service providers. However, the operations of a hospital are quite different from those of a dental clinic. Therefore, the risk tolerance of these two players is different, which also means they would need to allocate different resources for compliance matters.
It is important to evaluate your entity’s risk tolerance in terms of regulatory compliance. This way, you can determine whether the resources you want to allocate for compliance are enough.
Implementing Practical Risk Tolerance for Your Business
Making your business compliant with regulatory requirements requires human capital and money. While the regulations may seem prohibitive, being compliant can safeguard your enterprise from malicious third-parties, consumer litigations, and huge regulatory penalties.
Follow the steps below to implement a practical risk tolerance program for your business:
1. Designate a Compliance Manager
When looking to hire a compliance manager, you have to go beyond the base salary. There’s worker’s comp, 401k contributions, various taxes, medical insurance, and more to think about. Majority of new businesses do not have the financial muscle to cater for the expenses that come with hiring a full-time compliance manager
Instead of hiring new staff, designate an employee to lead the compliance efforts internally. The person should be skilled and able to research, teach, and implement relevant compliance requirements for your organization.
2. Determine Your Risk Tolerance
Determine the key priorities for your business. Find out the major compliance requirements that your business should meet. For example, firms in the healthcare space have to contend with OSHA or HIPPA regulations.
Focus on the compliance requirements that are going to have a major impact on your organization. While you can implement all compliance requirements at once, focusing on the critical few that will mitigate the major risks along the way is a smart move.
You can also buy insurance to safeguard your enterprise against the risk of data security breaches. For example, healthcare providers can take data breach coverage, which caters for the costs related to penalties and fines.
3. Budget Your Time & Resources
Next, determine the cost of implementing the compliance program. Check your budget and the resources you will be allocated for the project. This will help in refining the risk tolerance. For example, when budgeting, you may realize that some compliance tasks that you were planning to postpone are cheaper to implement.
More large companies meet regulatory compliance requirements than smaller firms, mainly because they allocate adequate resources for implementation. Apart from this, the firms have experience in navigating such legal issues.
4. Speak with Peers and Regulatory Advisors
To effectively meet compliance requirements, talk with your peers and industry leaders to find out what is required. A trusted advisor can help to kickstart your company’s compliance by providing an implementation framework that will lessen your learning curve.
Tap into your network of IT providers, compliance consultants, accountants, and attorneys to find out how compliance regulations can affect your operations. Moreover, you can outsource the compliance program to professionals in your network so that you focus on the main task of growing your business.
Heading into the future, compliance regulations are not going to go away. In fact, they are likely to intensify. For businesses, the new reality of handling data has to be embraced as a core part of operations rather than an additional afterthought.
Entrepreneurs need to educate themselves on compliance regulatory requirements in their space and build their companies to be compliance-ready.