Compliance Risk 101: How to Bulletproof Your Business
Navigating the Compliance Maze: Your Guide to Risk-Free Operations
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Understanding Compliance Risk Assessment:
A Compliance Risk Assessment evaluates the potential compliance risks a business might face. It determines the magnitude and potential impact of each risk and examines the control environment set up to mitigate those risks.
Here are some examples of compliance risks that small businesses might face in particular industries:
Restaurants/food service:
Health and safety violations (e.g., improper food storage)
Alcohol licensing breaches
Employment law issues (e.g., minimum wage, overtime)
Retail:
Data protection and privacy concerns (e.g., customer data)
Intellectual property violations (e.g., counterfeit goods)
Health and safety issues (e.g., emergency exits, fire safety)
Construction:
OSHA violations (e.g., fall protection)
Environmental regulations (e.g., waste disposal)
Permit and zoning issues
Healthcare:
HIPAA violations (e.g., patient data breaches)
Medical licensing issues
Pharmaceutical regulations (e.g., storage and disposal of drugs)
E-commerce:
Data protection laws (e.g., GDPR, CCPA)
Consumer protection laws (e.g., accurate product descriptions)
Payment Card Industry (PCI) compliance
Real estate:
Fair housing laws (e.g., discrimination)
Landlord-tenant laws (e.g., lease agreements, security deposits)
Zoning and land-use regulations
Automotive:
Environmental regulations (e.g., emissions standards)
Safety standards (e.g., vehicle recalls)
Licensing and registration requirements
Manufacturing:
Environmental regulations (e.g., waste management)
Quality control standards (e.g., ISO certifications)
Supply chain compliance (e.g., conflict minerals)
A small business owner might delegate responsibility for compliance risks to a Compliance Officer or Compliance Manager within their organization. If the small business does not have a dedicated compliance professional on staff, they might consider outsourcing this task to a Compliance Consultant or a Regulatory Compliance Advisory Firm. The cost of hiring such external expertise can vary widely based on the complexity of the business, the industry it operates in, and the specific regulatory environment.
As a rough estimate, hiring a Compliance Consultant could range from $50 to $300 per hour, depending on their experience and the region.
Engaging a Regulatory Compliance Advisory Firm might involve a broader scope of services and could range from $1,000 to $10,000 or more for a comprehensive assessment and ongoing advisory, again depending on the specific needs and size of the business.
“If you don't invest in risk management, it doesn't matter what business you're in, it's a risky business.”
-Gary Coh, Vice Chairman IBM