What You Should Know About Compliance Risk Management in 2023
When assessing risk to the organization, the conversation would only be complete with a discussion on compliance. This is especially true in 2023, as compliance mandates continue to evolve, and SMBs must understand which standards they must meet to meet current standards.
Compliance risk management is identifying, accessing, and mitigating any potential risk that may arise from failure to meet compliance standards. These standards could include laws, regulations, or any policies and procedures set by an outside party.
Failure to comply could mean an SMB is in breach of a contract or even result in a hefty fine. These fines have risen significantly in recent years, with the average non-compliance fine increasing 45 percent over the past 10 years and the average cost sitting at $14.82 million. Having best practices around compliance risk management can help an SMB prevent these types of fines, especially as new ones are added in 2023.
An SMB should first identify which compliance standards apply to them depending on their industry, size, and geographic location. These compliance standards could include HIPAA for healthcare organizations, PCI for those handling financial data, and GPDR for those with customers or contacts in the European Union. Additional cybersecurity standards are being rolled out for some regulated industries that an SMB will also want to ensure they are paying attention to, as well as employment compliance and other standards that an SMB will want to meet.
Once an SMB knows what standards apply to them, leadership should take time to assess if the organization is meeting those requirements. This may take some time and careful digging across the organization to help. It may not be possible to meet compliance standards overnight, particularly if it involves implementing new technologies or processes. Still, an SMB should always strive to meet requirements put before it and carefully document these efforts to ensure they can prove compliance if ever asked to. For the latter task, tools are available to help track documentation to ensure it is kept centralized and up to date in the event of an audit.
These compliance tasks may overwhelm SMBs who are not up to date with the latest standards or may not even know where to start. For that reason, many have turned to outsourced compliance risk management, which brings in a third party with expertise in meeting compliance and can help ensure that the organization meets all requirements on an ongoing basis. SMBs may find outsourcing compliance risk management helpful if they are looking to delegate this task.
Compliance standards are not going anywhere anytime soon; if anything, regulators only want to increase standards and enforcement in 2023 and beyond. SMBs will want to ensure they aren’t putting their heads in the sand because they are small businesses and instead address these issues head-on through a compliance risk management practice.