Compliance is a delicate topic to tread around. Its importance was identified after the recession of 2008 because governments around the world realized that mere creditworthiness or credit rating was not enough. The importance placed on the risks faced by a business started to increase significantly. Consequently, the government enacted several rules and guidelines that organizations had to comply with thereafter.
There were also other compliance measures from the start whose non-compliance opened up organizations to potential lawsuits from employees and authorities. These included minimum wages, SOX compliance, and IFC, to name a few. The problem here is that the fallout of such non-compliance isn’t limited to fines or penalties. It extends to distrust created in the general public, affecting an organization’s public relations campaigns, market standing, and a backlash from the shareholders.
Traditional Compliance Methods
Initially, organizations had a legal process management system in place. This involved people actively updating the compliance matrix. However, as business complexities increased, new compliance measures were introduced. Since these were mandatory, people had to update their knowledge of the system continually.
Legal Compliance Software
An automated system is extremely effective in this regard because such a system is linked to the entire organization. This facilitates such a system to continuously check for non-compliance and non-conformity to the organizational policies and the general legal requirements. The only human element involved in this was the need for updating the compliance measures and the system would adapt to ensure the new rules would come into effect.
While the general onus for such an amendment on applicable laws lies on the employees and shareholders as well, in the event of non-compliance, the organization would have to deploy corrective tactics and reactive measures. It is entirely possible that, by then, it would be too late.
Importance of Legal Compliance Software
Streaming compliance in this regard needs a highly accurate legal compliance software that can target the high-risk areas without redundancy or superfluousness in terms of the restrictions that would need to be imposed. While there definitely will be challenges in terms of understanding the implications of such compliance measures from a strategic and operational point of view, having an automated legal process management system could solve a lot of such problems.
A good automated system would track all the compliance-required activities in one place, rendering the decision-making process easier. It could also track, assess, document, monitor, and audit all the core functions from a strategic and operational point of view. This way, the risk of human errors in compliance would be vastly reduced. Investor confidence would be boosted because of the robustness of the systems in place. Such a system would also make filing easier
A Luxury or a Necessity?
When the businesses were small and the economies ran in relatively safer environments, such systems would have been a luxury. However, in the present scenario, given the number of processes that need to be compliant, organizations would be better off using an intelligent, AI-powered legal compliance software.