Measuring the Impact of Compliance Software on Business Performance
Compliance impacts your business performance more than you know. From safeguarding your company against heavy financial and reputational losses to building an ethical culture that improves both productivity and bottom line, the way you manage compliance can make or break your business.
However, managing compliance is not the easiest task in the world. Laws and regulations sometimes evolve faster than we can blink our eyes. You need to analyze vast oceans of data to gauge the efficiency of your compliance program. There are several key KPIs to implement to set consistent compliance goals. Sometimes, a single error in the process is all it takes to expose your business to heavy financial, reputational, and legal damages.
This is when the need for dependable compliance software becomes vital to ensure your business stays protected and your people stay productive. According to data, about “35% of risk and compliance professionals are adopting technology to meet regulatory requirements” and about 74% of professionals acknowledge the role of risk and compliance in “enabling, supporting, and enhancing business activities.”
Here, we look at why compliance software is vital for a business and what key metrics you should consider when enhancing your compliance program.
Why Compliance Software is Vital for Your Business
Here’s how compliance management software strengthens your compliance program and improves business performance:
Ensures Efficient Risk Management
Compliance software isn’t just a tool for adhering to laws and regulations. It also serves as a powerful framework for comprehensive risk management.
Risk assessments are a critical part of compliance management. By streamlining the risk assessment process, this software helps your team overcome all roadblocks when collecting and storing data, as well as assessing risk across the business. Because everything is stored in a centralized location, you can now break down silos to create a single, unified source of truth across the company.
Ensures Compliance + Keeps Regulatory Fines at Bay
Compliance is one of the top concerns for 41% of businesses and, according to IBM’s Cost of a Data Breach Report, “an average cost of $5.05 million was associated with organizations who have a high level of non-compliance.”
In a rapidly evolving compliance landscape, not keeping up with new changes can lead to heavy legal and regulatory fines. However, staying on top of new laws and regulations requires more than manually keeping track of changes 24/7. A compliance software sends automatic updates your way each time a regulatory change occurs so you can take immediate steps to include it in your compliance program and update your teams.
Improved Efficiency
Compliance software offers a centralized repository of risks, controls, and obligations, ensuring all your compliance and audit reporting processes are streamlined. Centralized data and controls ensure the right people get to access the right information at the right time. This boosts risk visibility and allows you to assess important compliance KPIs to make informed business decisions.
Improves Corporate Culture
With compliance software, you can easily track KPIs such as training headcount, number of misconduct reports, compliance training expense, total violations of rules and regulations, number of investigations into compliance, mean time to issue discovery, mean time to issue regulation, and more. Having this data at your fingertips via a centralized platform allows you to take proactive steps to mitigate wrongdoings, improve your compliance training, improve the way misconduct is reported, and ultimately build a culture of honesty, positivity, and ethics.
Eliminates Manual Tasks
Maintaining compliance comes with a never-ending checklist of processes and tasks. These tasks require meticulous attention to detail. Compliance software streamlines and automates most routine tasks so your team can shift their focus on strategic business goals instead of spending hours on mind-numbing repetitive processes. Because these tasks are automated, they prevent any possibility of human error, ensuring your business doesn’t (unknowingly) run into compliance troubles.
Key Compliance Metrics You Cannot Miss
Here are some key metrics that are critical to assessing the success of your compliance program:
Mean Time to Discovery
This metric allows you to measure how long it takes for your business to discover a compliance violation. The faster your mean time to issue discovery, the more effective your company is in uncovering violations.
Mean Time to Resolution
This KPI reveals how quickly you resolve an issue once it’s discovered. It takes a lot of strength for your employees to report misconduct. When your team works on investigating and resolving issues quickly, your employees realize that you take their concerns seriously. This encourages more people to report wrongdoings, ultimately creating a speak-up culture.
Cost Per Incident
Your compliance budget incurs a cost each time you manage an issue. Measuring the average cost per compliance issue uncovers how well your team investigates and resolves these concerns. A decline in your average cost per incident over time also indicates you’ve dealt with the most serious instances of misconduct.
Accuracy of Risk Predictions
Making risk predictions allows your team to calculate the chances of compliance risks that may unfold in the next quarter. Comparing these predictions with the actual outcome can then reveal how well your team predicts risks and prepares for them.
Number of Misconduct Reports
This is where you detail the number of misconduct reports you receive during a set period. Knowing these figures is vital to understanding how well your compliance processes work. However, it’s vital to pay attention to the story these figures tell. For instance, an increase in the number of whistleblower reports may seem like a negative outcome. But it could also be a sign your compliance training has been effective, and your employees feel more comfortable speaking up.
Compliance Training Headcount + Training Completion Rate
How many people turned up during compliance training? How many people completed the training? Employees will only understand the importance of ethics and compliance if they participate in and complete their training. While assessing this KPI is vital, it’s equally important to ensure the compliance training is engaging enough for your people to retain what they learn through interesting elements such as gamification, role-play, videos and images, real-world case studies, and more.
Parting Thoughts
Compliance is directly linked to the performance of your business and implementing a well-rounded compliance software is the best way to ensure your program’s success. From automating manual tasks to creating a centralized library of compliance assets to keeping regulatory fines at bay – implementing a comprehensive compliance software not only helps create an ethical culture but also contributes to your business’s bottom line.
