Why do we need compliance management? - GRM Institute

Why do we need compliance management?

” Laws continue to be enacted and the regulatory environment has become more complex due to unacceptable conduct remediation. Consequently, entities continue to be compelled to demonstrate compliances with legal mandates through documented assurance assessment.”


Having a strong and robust compliance management program is helpful to lean its functions in the organization. But what is compliance?

Compliance is basically a set of process and procedure which makes sure that the organization follows both Internal rules of conduct and the external rules of regulations.

For example, data privacy laws and tax regulations.

Compliance in an organization can largely depend on the size of the organization. For MSME sector compliances generally stays with that of business owner whereas for the MNCs they may have their own legal department.

It is believed that Compliance and Risk Management are interrelated. Compliances with established rules and regulations help to protect the organization from various risks whereas risk management is helpful to protect the organization from the risk that could lead to non-compliance.


What’s the need for compliances? 

  1. Essential to improving performance and eliminate internal errors: A healthy compliance function helps to make frauds visible, tracks metrics that show the areas of underperformance, and helps in making an organization lean in its management.
  2. Helpful to enhance consistency: There is always a higher risk of a decision to turn out to be impromptu and void if it’s without a compliance function. Well communicated rules help to act as a reference point if something goes wrong.
  3. Boosts bottom line: In today’s new normal world where data privacy is a major issue faced by many organizations, robust compliances have acted as a boon.


Research says that the average cost of compliances for data privacy in any organization would be around $3.5 million whereas non-compliance issues like penalties business disruptions and so on would be $9.4 million, i.e. 3 times more.

A strong and efficient compliance management system acts as a boon to organizational objectives besides, it also helps in increasing the trust towards the customers.


By Sharvari Saraf

PGDRM Batch Jan 2020

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