Glossary

Compliance Management System

Businesses of all sizes and industries have to pay attention to the government regulations that impact them. The penalty for non-compliance is often severe fines that can seriously cut into your bottom line as well as a loss in trust and reputation.

It’s such a vital consideration that many companies have a dedicated regulatory compliance management system (CMS) in place to maintain visibility and control over legal matters. It’s obvious why management needs to make an effort to stay aligned with the law, but there are also reasons why a business needs a formal system in place for it:

  • Government guidelines can change over time, and your business must keep up.
  • The issues that cause non-compliance often get worse over time, making bouncing back more difficult the longer you wait.
  • If you work with a capital partner like a bank, there’s a high chance that entity will want evidence of your compliance.

Don’t be left out in the dark about your compliance levels. Stay on top of your regulatory obligations by adopting a formal compliance management process. By baking a CMS into the corporate culture, you are proactively addressing the problems that cause non-compliance early on.

What Is a CMS?

Compliance management systems are all the tools, processes, and policies organizations use to stay aligned with government regulations. Running a CMS also comes with a few other responsibilities too:

  • Monitoring risks
  • Training employees on what they are responsible for
  • Enabling companies to take corrective actions when necessary
  • Minimizing the harm done to consumers as a result of a violation

Many regulations today have to do with cybersecurity, a common weak point for even larger businesses. Cybersecurity compliance frameworks are becoming popular for this reason.

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The Components of a Compliance Management Solution

Take a look at any compliance management system example, and you’ll find a few parts common to all of them. While every solution is unique to the firm it belongs to, everyone should accommodate the following components in a CMS.

Administrative Oversight

Whether it’s a management team or a board of directors, compliance must be at the forefront of this group’s attention. CMS work often trickles down from the top, so make sure you properly communicate the importance of compliance control to business leadership.

Doing so helps achieve long-term goals and gives you a clear vision of how your program will work. For instance, you might have to consult with vendors regarding a compliance management system software for the job.

If you’re serious about staying compliant, it might be advised to designate a chief compliance officer to advise upper management of any changes in goals or tactics regarding CMS.

The CMS Program Itself

The meat and potatoes of your efforts are the policies and tools used to implement the compliance management system itself. It should be an ongoing process rather than a one-time consideration.

This stage is where the controls are designed and put into effect. Compliance teams draft up documentation of the enforced standards and procedures, which will become an invaluable resource to employees.

Remember that a CMS should promote smooth communication and proper compliance training. You’re protecting not only your own reputation but also the well-being of your clients when you pay attention to government regulations.

Complaint Response

Ever receive a complaint or inquiry from a customer? Every business should be responsive to these contacts, as the information you gain from them are useful for developing future CMS efforts. Monitor interactions with clients to identify trends and areas where you can make improvements.

Auditing

Nobody needs to take your word for it. Compliance must be verified by an independent third-party every now and again to show that you’re still adhering to consumer protection and other laws. An external auditor is an impartial party that will offer you a fresh take on your progress.

Of course, businesses still need to do their own internal audits and risk assessments as well. Keep records carefully and monitor yourself in real-time, and don’t forget about vendor compliance management. You’re also partly responsible for the vendors you buy from, as they impact your internal operations and product output indirectly.

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to give you immediate value and run a full risk assessment in less than 30 days

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Or Hillel

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