What is Regulatory Compliance & Why is it So Important?
Regulatory compliance is a term that you have likely heard if you are in a management position for your organization, but unless your daily job integrates with compliance procedures, you probably haven’t given much thought to the ins and outs of what this term means. Regulatory compliance is used in essentially every sector of work, and refers to the rules, guidelines, and laws to ensure that businesses, their employees, partners, customers, and the public, remain safe.
Failing to abide by regulatory compliance laws can result in hefty fines, penalties, and potential legal action. Now you’re probably wondering how this applies to your work sector and how you can ensure your team stays on top of regulatory compliance procedures. Not to worry, our team is here to break it down for you.
We will be taking a deep dive into regulatory compliance as it relates to facilities management for many of our customers in healthcare, pharma, government, food and beverage, manufacturing, and more. But today, our team of operations and facilities workflow experts are going over the basics, giving you a better grasp of general regulatory compliance terms and procedures so you can proceed with confidence.
What is Regulatory Compliance?
In plain terms, regulatory compliance refers to businesses following state, federal, and international regulations created for their industry. While regulatory compliance can be used in many matters, the most common areas seen in the workplace are hiring practices, health benefits and employee privacy, work environment, wages and hours, workplace safety, recruitment and retention, and employee discipline and termination.
It’s important to note that regulatory compliance differs from corporate compliance, as corporate compliance refers to internal rules and policies, while regulatory compliance refers to state, federal, and international policies. Regulatory compliance began in the early 1990s, and since then, laws and policies have increased dramatically and continue to change quickly. Especially with the influx of new technology and rise in security breaches across the country, policymakers are doing all they can to protect the private information of employees, customers, and patients. However, this often brings confusion and frustration for businesses that may not be aware of these changes or have the trained compliance staff to help enact these new policies in a timely manner.
While many detailed acts have been written to assist specific industries, there are also many government agencies that oversee different sections of regulatory compliance. Some of these include the U.S. Securities and Exchange Commission (SEC), U.S. Office of Foreign Assets Control (OFAC), Small Business Administration (SBA), and the Occupational Safety and Health Administration (OSHA). There are also other federal agencies that work with specific industries to help guide regulations.
For technology companies like ours, NIST, or the National Institute of Standards and Technology, guides many of our regulations. That is why we’ve made it a priority to stay on top of multiple NIST certifications when improving our software, many of which focus on security for information systems.
What Are Penalties for Not Abiding by Regulatory Compliance?
When it comes to penalties for regulatory compliance failure, the long-term impact can be severe. While small regulatory compliance matters may not seem like a big deal at the time, failure to act proactively may cost your business excessive time, money, and ultimately your reputation. While penalties vary among industries, there is no doubt that non-compliance fines and lawsuits have grown exponentially in recent years.
Did you know that businesses lose an average of $4 million for a single non-compliance event? Or that within the first six months of 2019, almost four thousand data breaches were reported, exposing over 4 billion records? These staggering statistics are just the tip of the iceberg for regulatory compliance, and with continued security breaches for companies of all sizes, they will likely grow. In the event that you find yourself in the midst of non-compliance, there are two areas of penalties that you may face – business consequences and legal consequences.
Business consequences refer to internal issues your company may face, including business disruption, revenue loss, security breaches, and damaged brand reputation. Legal consequences include fines and penalties, lawsuits, regulatory scrutiny, and in severe cases, imprisonment.
For business consequences, certain agencies may require that you halt some if not all your current business operations for a period of time while they investigate your non-compliance issue. When this non-compliance issue becomes public, your business will have a damaged reputation and lack of trust from current or potential customers and partners, likely leading to additional revenue loss.
While this can be devastating for any business, legal consequences play a massive role in the downfall of many businesses that fail to comply with industry regulations. From lawsuits and court fees to repayment to customers or patients for sensitive information security breaches, non-compliance events often damage businesses irreparably.
Let SCLogic Guide You Through Compliance for Industry-Specific Facilities Management
Now, we don’t want this article to instill fear in you (well, maybe a little), but we do want to shed light on the importance of regulatory compliance for all industries. Understanding general and industry-specific regulatory compliance terms and laws for operations, asset, and facilities managers at companies of all sizes will help your business thrive with confidence that you are protecting your business, employees, partners, customers, and patients.
With over twenty-five years of experience in the facility operations and technology fields, and expertise in the government and federal technology standards sectors, we fully understand the importance of regulatory compliance standards and build our software, Intra, around them. In the coming weeks, our team will provide in-depth insights into regulatory compliance for industries including healthcare, pharma, food and beverage, manufacturing, finance, and more, so that your facilities management team is ready to take on any challenge that comes their way.