The assertive integration of risk management and compliance still represents a challenge for managers who want to reduce costs, security and accessibility .
Whether through intelligent and innovative corporate communication strategies or the adoption of risk scenario control policies, these are essential points for any company.
Compliance and risk management work together to stop risks to an organization’s physical assets and legal framework. Despite being complementary, these strategies each have distinct qualities and features inside an organization.
Therefore, check out the following special content on the subject, everything about the two methodologies and their advantages when applied properly within business.
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To begin: what is risk management and compliance?
Risk management and compliance are essential and necessary approaches for companies to achieve prolonged stages of sustainability and operational solidity .
Although complementary, each of these approaches represents different positions and procedures regarding the business.
Check out the detailed concepts behind each approach below and understand how to implement them in your organization’s daily routine, from improving and innovating business communication processes to making assertive decisions.
Risk management
Initially, it’s important to understand what risks are: internal and external effects that create uncertainty and unpredictability in any business management process. When these uncertainties are combined with inadequate management, the potential for losses, often irreparable, increases.
The best way to deal with this issue is to implement management that measures and directly combats risks, preventing them from affecting the organization’s profits and operations.
Risk management, therefore, represents a series of specific processes and activities aimed at correcting incidents and preventing failures that compromise the organization — in addition to generating value for the company.
This management also involves identifying opportunities that enrich the market value and infrastructure of the business as a whole. Therefore, managing risks also means establishing strategies that strike a balance between the goals to be achieved and the various potential risks.
Regardless of a company’s segment or size, adopting risk management strategies is crucial.
Compliance
The name comes from the English verb “to comply,” which means to act in accordance with rules. Compliance is often translated as “conformity,” highlighting its meaning—a methodology for complying with current legislation.
Compliance involves a series of control mechanisms designed to ensure that the institution’s processes are carried out in accordance with legal requirements and without neglecting the ethical values linked to the company’s mission and values.
It involves maintaining good relationships with investors, customers, and suppliers—that is, the company’s entire relationship chain. In light of these aspects, the objective of compliance is to ensure, in conjunction with specific sectors of an organization, that the institution’s guidelines system is aligned and strengthened with laws and regulations .
Implementing the program in an organization ensures greater control over processes, which will be able to mitigate risks and act to verify more transparent operating practices.
It’s also worth highlighting the difference between Compliance and Corporate Governance , although the concepts are related. The latter is the set of strategies used by a company to demonstrate its value and commitment to shareholders and customers.
Risk management VS compliance
As we saw previously, both compliance and risk management are two possibilities for an intelligent and solid management policy against potential loss scenarios for the company.
Both have positive impacts from the financial and legal spheres to the perception of brand value by its stakeholders.
- The structure of a company with the purpose of maintaining operational security states ;
- The qualification of internal control processes;
- Strategic performance evaluation.
Although compliance and risk management are complementary features, each presents a specific profile within the scope of business management.
On the one hand, compliance can be understood as a culture of alignment with good management practices. For example, from a legal perspective, the architecture of internal processes and corporate communication, or even the way documentation is filed with a view to the LGPD.
Risk management is part of the compliance culture as one of the tools for preventing, detecting, and establishing guidelines for controlling and monitoring potential risks, as well as conventional operations.
Thus, despite their differences, the two methodologies are complementary and work together to ensure adequate and intelligent management of an organization.
Risk management, compliance, and technology: how do these integrations benefit the organization?
In such a competitive market, watched by increasingly demanding customers, integrating sectors is the solution for the organization to increase its productivity.
Integration promotes a culture of support at all levels of the company , allowing for more accurate identification of the costs and requirements of the actions that will be implemented through compliance.
Using an integrated approach improves a company’s overall level of transparency and helps reduce the use of financial resources. However, these efforts must include process standardization, which may include IT investments to help increase competitiveness .
Considering the concept of digital transformation related to technological innovations, such as cloud storage and automation software, for example, a major change is observed in the entire business operation.
This technological transformation is a highly relevant cultural shift, as it provides a means to test new solutions and abandon old processes that no longer generate value for the company. Furthermore, IT trends have driven business innovations and influenced consumer behavior, which increasingly demands practicality, agility, and help their company avoid business risks.
In this way, the integration promoted by these three areas allows companies to achieve high levels of efficiency and operational security , ranging from the way information is processed to the trends implemented.
Benefits of risk management and compliance
1. Risk and failure reduction
The combination of risk management and compliance within the company enables the implementation of practical actions to reduce risks and failures. This is due to the culture of safety, control, observation, and evaluation carried out by the company’s team of experts.
2. Increased possibility of new business
Presenting solid compliance and risk management policies signals to the company how to map out possibilities of trust and attract new investments.
Once potential investors recognize the company’s credibility, they can see an increase in business.
3. Compliance with standards and legislation (LGPD)
The General Data Protection Law (LGPD) represents a milestone in the market and in the treatment of personal data in Brazil. Therefore, by complying with legal standards, the company guarantees greater security, institutional credibility, and new investments.
4. Humanization and sensitivity for employees
Companies with a high level of awareness and solidity in their guidelines tend to attract talent , as well as retain employees with high performance rates.
Therefore, companies committed to ethical values present higher levels of humanization and sensitivity towards their team and greater guarantees to increase productivity in the corporate environment.
5. Strengthening knowledge and integrating groups
The organization’s awareness, achieved through risk management and compliance, also positively impacts how stakeholders and their groups integrate with the company’s values, goals, objectives, and planning.
6. Cost reduction with corrective actions
Managing risks can reduce and ensure cost savings within the business. Avoiding problems means avoiding expenses. This ensures the organization’s financial health and can even increase profitability for new investments.
7. Effective planning and analysis of company objectives
Developing strategic plans ensures a 360-degree view of risks and positive scenarios for the company. Effective management enables accurate diagnoses to define goals, priorities, and/or preventive actions.