The increasing importance of compliance
21 April 2015
Non-compliance can have very serious, and sometimes devastating, commercial consequences. Against an increased level of regulatory scrutiny and ethical expectations, and given the financial and reputational damage that results from corporate scandals, compliance has moved up the corporate boardroom agenda.
As a result, ensuring compliance with both local and international laws should be part of the ordinary, day-to-day activities of a company. In-house counsel, as well as compliance and HR officers in a wide range of industries are increasingly confronted with the need to develop a more formal “compliance policy”, introducing effective legal risk management processes covering a wide range of areas, from antitrust to anti-corruption and bribery, and from employee protection to data protection and privacy.
More and more companies are seeing increased value in investing in strong compliance programmes because these programmes not only prevent infringements, but may also serve to mitigate fines if an infringement has been committed. A tailored compliance programme, targeting the business’ risk areas, is important in helping companies navigate the pitfalls without imposing unnecessary restrictions.
Of course, embedding these compliance policies into a company’s culture requires further, practical measures. Having compliance policies but not enforcing them may be almost as harmful as not having them at all. The most effective way of ensuring compliance is to train employees in the basics and how they apply to the business. Regular health checks and clear procedures for reporting concerns are also critical to promoting effective compliance.
Questions each company should ask itself
- What are the main areas of risk for your business?
- Does your company have a compliance policy in place?
- Are all areas of risk covered by it?
- To whom does the compliance policy apply?
- Is the compliance policy part of your company culture?
- Has it both been endorsed by senior management and adopted by your employees working in the field?
- Is the compliance policy legally enforceable?
- How do you monitor compliance?
- Does your company have reporting procedures for potential breaches?
- Is everything in place in order to take swift disciplinary action for breaches of the compliance policy?
- Does your company know how to enforce the compliance policy in its dealings with business partners?
Learn more about our Belgian compliance practice.