The numbers are rolling in and economists are trying to make sense of the different markers, but they haven’t yet decided if our economy is officially in a recession. Whether it’s official or not, however, the signs of some economic challenges are surely presenting themselves. For example, we’ve seen employment decrease in a few key industries, most notably the recent rash of layoffs in tech, inflation is up about 6.5% over last year and prices for many goods are on the rise.
The normal reaction of businesses, when there are signs of recession on the horizon, is to decrease spending and investments. Unfortunately, compliance is often included in those areas that management earmarks for budget cuts.
Why Your Company Shouldn’t Skimp on Compliance
Cutting the budget for compliance efforts can have several negative effects on an organization. Compliance refers to the act of adhering to laws, regulations, and industry standards, which is crucial for ensuring that the organization operates ethically and legally.
- Increased risk of legal and regulatory violations: With less money and resources dedicated to compliance efforts, an organization may be more likely to violate laws and regulations, which can lead to costly fines, legal action, and damage to the organization’s reputation.
- Damage to reputation: Compliance violations can damage an organization’s reputation and erode the trust of customers, partners, and stakeholders. This can lead to lost business, decreased revenue, and difficulty attracting and retaining employees.
- Increased operational risk: Compliance failures can also lead to increased operational risk, such as data breaches, financial losses, and other issues that can impact the organization’s ability to function effectively.
- Reduced employee morale: Employees who are responsible for compliance efforts may feel demotivated if they see their budgets and resources reduced. This can lead to lower employee morale, increased turnover, and decreased productivity.
Overall, cutting the budget for compliance efforts can be a short-sighted decision that can have significant negative consequences for an organization in the long term. It is important for organizations to prioritize compliance as a key part of their operations and allocate the necessary resources to ensure that they operate within the bounds of the law and maintain their reputation.
Avoid the Need for Budget Cuts with Compliance Outsourcing
Outsourcing professional services can be a cost-effective way to resolve budget issues for an organization. Outsourcing refers to the practice of hiring a third-party service provider to perform certain tasks or functions that would otherwise be performed in-house.
Outsourcing helps lower the economic burden of compliance. It enables organizations to access skilled professionals at a lower cost than hiring full-time employees. This can be especially beneficial for organizations that need to scale up or down quickly in response to changing business needs.
Fractional compliance services also give organizations access to specialized expertise that may not be available in-house. This can help organizations to achieve better results in areas such as compliance, accounting, marketing, and IT, which can lead to improved efficiency, productivity, and profitability.
Related article: How Regulatory Compliance Actually Saves Your Company Money.
Why It’s So Hard to Hire in Compliance
In recent years, the number of people qualified to work in specialized compliance roles has dwindled, making it hard for companies to hire quality cybersecurity specialists and more general compliance advisors. This shortage has made compliance practitioners, managers, officers even more desirable and expensive to hire.
On the one hand, regulatory bodies such as the FTC and the New York Department of Financial Services are increasingly demanding that organizations retain a chief information security officer (CISO) and/or a senior-level compliance officer. Even the U.S. Securities and Exchange Commission recently proposed a change that would require firms to designate supervisory roles responsible for drafting policies and overseeing compliance processes. The trend in all industries is pushing organizations to make compliance a C-level priority.
On the other hand, compliance officers are extremely specialized, so each enterprise requires multiple specialized practitioners. This makes it difficult to see how there could simply be enough compliance specialists to go around. Top positions present an even greater challenge. Universities and certification programs are working hard to push more entry-level individuals into the job market and fill some of those roles. Yet, in the relatively young profession of compliance management, experience counts the most and it is in short supply.
Related article: Outsourced vs. Co-Sourced Internal Audit Services.
How Virtual Advisors Augment Your Compliance Team
First, when a virtual compliance advisor starts working with a client company, he/she will assess your current virtual compliance programs and then suggest changes to keep everything up-to-date and compliant with the latest regulations. They will develop strategies to build on existing compliance programs or provide you with new virtual solutions that can maximize performance. Virtual compliance specialists also provide guidance on new, automated compliance solutions that can help your company achieve and maintain compliance faster.
Second, outsourced compliance specialists cover a wide range of specialties to fit the unique needs of any size firm and its compliance program. A smaller firm might hire a fractional compliance specialist to assist efforts because its compliance budget cannot support a full-time professional, or because the CCO is already overworked and juggling many duties. A medium-sized or big organization may sub-contract compliance roles to gain more bandwidth in order to finish compliance engagements on time. In this sense, virtual compliance support is entirely scalable.
Related article: Outsourcing IT Security Service vs. Hiring Specialized Staff.
What Roles Can Virtual Compliance Specialists Cover?
Let’s take a look at all the different hats that an outsourced compliance specialist may wear:
Foundational Policies and Procedures
- Create or update compliance policies.
- Create, evaluate, or update compliance policies.
- Keep track of regulatory developments and create pertinent policies as needed to meet operational changes or processes.
Monitoring & Compliance Program Management
- Create a board and oversight duty education program, and provide it to board members as needed.
- The compliance program update, the progress of the compliance fieldwork items, potential regulatory consequences on the business, and ad hoc audits as identified by detected defects should all be included in board reports.
- Analyze and/or design the Compliance Board’s organizational structure, including its membership, format of reporting, and charter.
- Give the CCO advice on how to manage the compliance program efficiently and secure the right oversight.
Analysis and Reporting
- In accordance with the CO’s guidance and the advice of the organization’s legal counsel, evaluate hotline reports and carry out any necessary investigations.
- Review and make any necessary revisions to the entity’s compliance policies and procedures.
- Help with procedures for tracking and looking into problems that come up during audits carried out by outside parties, like third-party suppliers and government auditors.
- Create the required reporting structures and tools to inform executive leaders, shareholders, and management of the relevant departments of monitoring and audit findings.
Training and Awareness Education
- Keep track of regulatory changes to see how they may affect the business, and where necessary, create appropriate training for staff members.
- The annual risk assessment, regulatory changes, and the results of monitoring and auditing are used to develop the compliance training plan.
- Review and/or create compliance training materials and curriculum.
- Create and provide yearly HIPAA training.
- For high-risk sectors like revenue cycle and vendor contracting, create and deliver specialized compliance training.
- Create and deliver specialized cybersecurity and ethics education.
- Create training based on risks as determined by the annual risk assessment.
- Monthly or quarterly compliance “hot issue” training should be provided.
- Conduct compliance audits based on information gathered from continuous monitoring operations and the annual risk assessment.
- Analyze the procedures and controls for current compliance auditing and monitoring.
- Create procedures for quickly detecting and responding to security incidents.
Workplan and Compliance Risk Assessment
- Review the techniques and resources for risk assessment.
- For inclusion in the compliance work plan, evaluate roles, responsibilities and the identified risk elements.
- Develop prioritized action plans that are associated to high-level risk factors that could expose a company to a significant amount of damage.
Mitigation and Response
- Help draft corrective action plans and track their implementation, both internally and in response to external audits conducted.
- For relevant roles, provide exit interviews and/or exit interview templates to ascertain awareness of potential compliance exposure.
- Assist in creating a vendor management process, which includes putting controls in place to monitor vendor contract terms, establishing protections for vendor selection, and offering vendor compliance training.
Implementation and Enforcement
- Review and update the compliance policy’s wording, including the consequences for noncompliance.
- Help with setting compliance objectives for audits and yearly performance reviews.
- Assist in documenting the procedures for disciplinary actions taken in response to noncompliance issues.
Assistance with Regulatory Compliance
- Provide guidance and support, including but not limited to:
- providing subject-matter knowledge in order to comprehend compliance requirements and their effects on the organization.
- identifying the compliance program’s shortcomings and creating mitigation plans with deadlines, accountability, and internal reporting
- helping to put mitigating measures into place and reporting frequently to the monitor.
- Perform due diligence on third parties to assess potential compliance issues.
When Is Fractional the Right Solution for Your Team?
“A lot of our clients choosing fractional compliance services are in that mid-size or smaller category, but even some larger banks and corporations are outsourcing risk assessments. That’s typical when times are tough.”– Rachel Delgado, Information Se at I.S. Partners.
It’s great for projects, monthly, quarterly or annual performance management, and when the organization has specific one-off goals that lie outside the internal team’s specialization. But more specifically, these situations are when the benefits of outsourcing compliance roles are best seen:
- Difficulty hiring and budgeting for the salary of full-time CCO or compliance specialist,
- Transitioning from one compliance framework to another, such as from PCI to SOC, or to HIPAA or HITRUST,
- Working to meet new regulations going that will apply to your service area or industry,
- Need to address anything that has been listed under an internal auditors’ or industry regulator’s list of concerns,
- Implementing GRC program or third-party risk management for vendors,
- Approaching an audit for the first time,
- Developing or updating policies and procedures,
- Quarterly user-access reviews,
- Basic-level monitoring activities needed to meet regulatory requirements,
- Consulting and advising.
Related article: the Bad Alternatives to Compliance Outsourcing Services.
How Virtual Compliance Specialists Can Save You Money
Choosing virtual compliance advisory services helps ensure that you get the most out of your compliance investments and efforts. Virtual advisors bring with them valuable training, experience, and expertise that has been developed over the years in the field. Fractional compliance advisors can help streamline processes, improve efficiency and effectiveness, and ultimately save costs in the long run. Because they are less expensive than a full-time equivalent, yet still have valuable compliance experience, virtual figures are financially appealing. Plus, support can be customized to accommodate particular needs, allowing CCOs to get the most out of every dollar spent on their compliance program.