Regulatory changes are frequent visitors in the world of business. Sometimes, these changes occur in the blink of an eye, and organizations that fail to realize them (unknowingly) end up on the wrong side of the law.
Keeping pace with complex regulatory changes demands a proactive approach. Businesses must arm themselves with advanced compliance management software, train their teams consistently, take additional precautions with AI/ML (artificial intelligence and machine learning) use, and implement immediate policies based on emerging changes.
Here, we lay out a roadmap to help you navigate the ever-evolving compliance landscape and keep pace with emerging regulatory shifts.
The Compliance Landscape Is Changing Faster Than We Realize
In 2022, the regulatory events Thomson Reuters monitored across 190 countries summed up to 61,228 (making it a daily average of 234 events). These staggering figures not only uncover the volume of regulatory changes businesses must keep up with but also the speed at which they evolve.
New technological advancements bring along newer regulations. The risk landscape today is far more complex than it was a decade ago. This leaves businesses with no choice but to alter existing policies and introduce new ones to avoid legal, reputational, and financial damages. A few of the many regulatory agencies that are changing rapidly include:
- NIST (National Institute of Standards and Technology)
- HIPAA (Health Insurance Portability and Accountability Act)
- PCI DSS (Payment Card Industry Data Security Standard)
- ISO 27001 (International Organization for Standardization)
- GDPR (General Data Protection Regulation)
Keeping pace with these changes is especially challenging and critical for organizations operating in highly regulated sectors like banking, healthcare, financial services, and energy. Now is the time for these industries to embrace advanced compliance and risk management tech and proactively train their teams to accommodate new ways of staying compliant.
Technology and Compliance Changes
Technology today is driving more regulatory changes than ever before. While artificial intelligence and machine learning (AI/ML) bring promises of efficiency and precision, their tremendous power demands increased responsibility. Businesses must prepare for challenges such as:
- Human Bias. When designing and training algorithms, biases can inevitably seep into AI/ML systems. Businesses must implement policies for detecting and managing biases as part of their overall risk management framework.
- Cybersecurity. AI/ML adoption has made businesses vulnerable to unique risks and cyber threats. Hackers can manipulate data at various stages of this technology’s lifecycle, causing these models to make incorrect decisions.
- “Black Box” Complexities. ML systems are often called black boxes because their outcomes are difficult to explain. This makes it challenging to detect the appropriateness of their decisions.
- Data Privacy. AI/ML models can leak sensitive and anonymized data directly or via inferences. It’s vital to implement enhanced privacy standards to avert these concerns.
Why Staying on Top of Compliance Trends Matters
Recovering from hefty fines, legal pitfalls, and reputational losses due to noncompliance or other unethical activities can take years or bring a business to its demise.
Investing in the right compliance framework, training your teams in compliance matters, and staying on top of regulatory changes helps shield your organizations from irreparable losses. Compliance helps businesses operate ethically, safeguard sensitive information, foster transparency, and adhere to industry-specific standards.
Compliance doesn’t just act as a protective shield against regulatory challenges. It helps build a lasting culture of trust, ethics, and openness, ultimately contributing to overall team productivity and bottom line.
How to Proactively Keep Up with Compliance Changes
Keeping pace with compliance requirements demands a proactive approach. Here are a few ways to adapt to regulatory changes:
Invest in Technology
Regulations will keep evolving. Instead of having a team manually monitor these changes, businesses must invest in advanced ethics and compliance software to detect changes as they appear and automate processes accordingly.
Train Your People
Businesses must build a culture where compliance becomes everyone’s responsibility. Not doing so may result in serious damage. Establish a solid training plan to ensure everyone stays up-to-date with the latest regulations. Avoid cramming all sessions into a once-a-year training. Instead, deploy microlearning to ensure training is short, engaging, and memorable.
Fuel Collaboration and Stay Informed
Build valuable relationships with industry peers, regulatory bodies, and other stakeholders. This sort of collaboration ensures a better understanding of regulatory changes. Collaboration also helps businesses collectively advocate for industry trends. Take proactive steps to stay informed about changes directly impacting your sector by subscribing to relevant publications, attending conferences, forming industry associations, and more.
Establish a Solid Risk Management Framework
Regularly analyze how regulatory changes impact your business. Establish a flexible risk management system that is quick to adapt to changes as they arise. The more responsive your framework, the better your business will fare in an ever-changing compliance environment.
Listen to What the Data Says
Policies, technology, and training aren’t just the only tools to maintain a state of compliance. You must leverage data analytics tools to identify your compliance strengths and weaknesses and remedy any areas prone to risks.
Legal Obligations vs Business Ethics
The goal of regulatory shifts is to assist businesses in operating ethically. Unfortunately, many organizations fail to differentiate between what’s legal and what’s ethical. Legal standards emerge from written law whereas ethical standards come from a deep understanding of what’s right and what’s wrong. Ethical leaders understand that what’s legal is not always ethical and this philosophy enables them to create a lasting culture of compliance and ethics in business.
Consumer Trust and Business Reputation
Compliance is directly linked to how a business is perceived. The overwhelming volume of regulatory changes and the dominance of social media make it highly challenging for businesses to stay compliant at all times. A single instance of noncompliance is often enough to damage the reputation of an organization (regardless of its size). A bad business reputation inevitably leads to dwindling consumer trust in today’s global marketplace.
Establishing credibility today has simply become synonymous with adhering to laws, rules, and regulations, operating with transparency, and taking steps that are morally upright.
Embrace the Future of Compliance
Today’s compliance landscape is rife with regulatory changes. Not being aware of the minutest change is enough to trigger serious damage to any business. As technologies advance and regulations become more complex than ever, businesses must proactively strengthen their compliance management systems to automate tasks, mitigate risks, implement new policies, and stay ahead of emerging challenges.
