In the United States and around the world, regulatory compliance describes an organization’s or firm’s compliance with laws, rules and regulations relevant to that specific company. Today, virtually all businesses regardless of their size have a set of rules and regulations that they must adhere to.
Regulatory compliance depends largely on the type of business, location, services provided, the role and function of the employees and other factors
In the United states, these factors also vary from state to state, with each state providing certain standards for all companies. Even more, within a state, companies are required to adhere to different rules based on the county of residence. Aside from these company specific, state specific and county specific rules and regulations, the U.S. federal government imposes certain laws and guidelines on all companies in the United States. In other words, when it comes to regulatory compliance, there are at least three layers of laws and other rules and regulations that a business must observe when operating in the United States – regulatory compliance at municipality, state and federal level.
For every company navigating the universe of regulatory compliance is challenging and when done incorrectly it can threaten the firm’s operations, reputation and existence. However, a compliance plan that is robust and effective can help a company navigate those risks and achieve success. Some of the compliance areas regulated by U.S. federal law include taxes, securities, employment, privacy, antitrust, advertising, commerce and telecommunications, intellectual property, financial services and insurance and transportation, health and safety.
While regulatory compliance in the United States may seem burdensome, a company can benefit from complying with applicable laws, rules and regulations and regulatory requirements can in fact aid businesses.
Below are several ways organizations can benefit from compliance activities:
- Think ahead. With every digital transformation project, a firm should consider potential regulatory implications and create a flexible compliance plan that can keep up with changes in the regulatory environment. Some flexible compliance policies can include automating data retention policies to achieve compliance with global regulations and providing more in terms of security and data policy protections.
- Use compliance to the company’s advantage. Compliance is an investment, but it is also an opportunity. Companies compile data, information and analysis in order to adhere to regulation standards. However, aside from benefiting the regulatory agencies, the information can be used by companies to enhance operations and drive change. This is because by collecting all the information, data and analysis, companies can assess strengths and weaknesses and use the insights that flag problems to spot solutions. Even more, data collection and reporting can help companies to improve customer experience and increase sales.
- Do let the regulatory environment distract from the company’s goals. Compliance with regulations can be both a curse and a blessing and it is important for companies not to let the regulatory environment distract from the real purpose. For example, today many firms’ compliance departments are overly focused on the European Union’s Data Protection Regulation. When dealing with regulatory compliance, it is crucial that organizations continue to invest and devote resources to their business models to drive progress and ultimately stay compliant with regulators.