Compliance Risk and Its Different Types, Explained!
In every business, there are risks that should be thought of and be taken seriously. And one of these said business risks is the compliance program risk. Sometimes called integrity risk, it is the very instance where a business is exposed to legal penalties facing loss of materials and financial forfeiture due to failure of acting in accordance with the existing laws and regulations in the industry.
What usually happens is that in most businesses, even if they have the full intention of complying with the law, still they have compliance risks, most probably rooting from a failed management.
Let's identify some of the types of compliance risk.
Such risk is identified to likely cause damage or provide actual adverse threat on living organisms or the environment due to discharges or depletion of resources out of an organisation’s activities.
The very risk in which a business released a product or served a service that is of poor quality, failing to meet the level of expectation as what is being required in the specified industry or that it violated laws and regulations.
Resulting to errors in reporting and accounting, and thus failing to meet the responsibilities that were entrusted by partners or customers is what this risk is all about, caused by unsuccessful processes.
Risk in the Workplace Health and Safety
This risk involves unfortunate incidents, recurring injuries, and all aspects of health and safety in the workplace. Thus, control measures should be done by thinking about what might cause injury to people and whether equitable steps have been taken to prevent it from occurring.
Risk in Social Responsibility
This type of compliance risk is all about the activities of a business harming its workers or the people existing in the communities where the business is operating.
Corrupt Practices Risk
It is the risk having the potential for corrupt practices, to mention fraud or bribery. Usually, the organisations are the ones that are responsible for the activities of their agents and employees when it comes to this type of risk
The aforementioned risks were just a few of the many types of compliance risk. This just means that businesses owners should also take compliance into consideration by performing necessary processes, as well as noting all things that should be done just to be able to avoid the possible risks. Here’s where compliance management system enters the scene, and thus, you will be needing it as soon as you have the initial plans of having a business for you not to end up forgetting business compliance of which the majority of businesses do.