What is compliance, why is it important, and what is the purpose of following established rules and procedures? This article examines these questions.
What is compliance and why is it important?

What is compliance and why is it important?

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4 minutes of reading

Compliance is an area that is (or should be) an essential part of any organization's business operations - regardless of industry. In its simplest terms, it's about acting in accordance with established guidelines and/or legal requirements - such as industry-specific standards, GDPR and ethical norms.

As an organization, you simply need to ensure that your organization complies with all applicable regulations and legal requirements, while having the right documentation to support your compliance.

However, being compliant is an increasingly complicated affair due to a growing number of regulations, and it can feel cumbersome to take preventative measures. But in the long run, you can not only save your organization countless costs, you can also minimise risks and increase efficiency.

What does compliance mean?

At its most basic level, compliance can be described as the process of ensuring that your organization and your employees follow all laws, regulations, standards and ethical practices that apply to the organization and the industry in general. Compliance covers both internal policies and procedures as well as regulatory requirements.

Compliance work is dynamic and requires constant adaptation, but the rewards are higher quality, trust and transparency in relation to products, services and data processing.

READ ALSO: What Is Governance and Why Is It Important?

Why is compliance important?

The purpose of compliance is to detect and prevent rules from being broken, but there's more to it than that. An effective compliance programme can help your organization avoid waste, fraud, abuse, discrimination and other practices that disrupt operations and put your organization's reputation at risk.

At the same time, a good compliance programme can improve communication between management and employees because it requires good, comprehensive and, most importantly, continuous communication. Employees cannot be held accountable for rules and regulations they do not know exist. On the other hand, good training and communication about your organization's compliance programme can make employees more focused on the broader goals of the business, making it easier for them to help operations run smoothly. You are simply equipping your organization's employees to do their jobs well.

A well-considered compliance programme can also contribute positively to external elements of the organization's value chain. Suppliers can be the source of several incidents and disruptions that can potentially be costly – such as information security, privacy and quality control breaches. This has become especially relevant in light of stricter EU regulations such as NIS2, GDPR, and CSRD, which increase the demands on organizations to not only manage their own operations, but also to know and manage the risks of working with third parties.

By ensuring greater transparency into third-party behaviour and integrating supply chain security, organizations can not only mitigate risks, but also promote smarter working conditions, improve efficiency and achieve cost savings.

Get a grip on compliance with the right tool

Many organizations establish a dedicated compliance programme to consistently and accurately manage their compliance policy. This can include targeted software that supports compliance work across departments to ensure efficiency and consistency across the board.

With the right tool, you can mitigate risks, prevent human error and, most importantly, streamline and standardise processes across the organization. This increases flexibility, transparency and operational efficiency.

The main benefits of a good compliance programme include.

  • Better overview and management of risks
  • Increased efficiency across departments
  • Better workflows and incident tracking

Compliance software provides great value across the entire organization, and in addition to the above benefits, it's worth mentioning that strengthened collaboration and better communication often follow in the wake of a good compliance programme.