Under good business practices, a company can implement and design systems, policies, and procedures for the preventive control of regulatory risks of companies. Generating a culture of prevention for the sake of regulatory and procedural compliance in the operation of a company will determine the success, since it will allow an early visualization of possible contingencies to it.
A compliance program is defined as “a business management system that aims to prevent and, if necessary, identify and sanction violations of laws, regulations, codes or internal procedures that take place in an organization, promoting a culture of compliance” (AS3906- Compliance Programmes, Standards Australia 1988, page 1.2).
An integral compliance management system implies determining obligations, establishing preventive controls and functions for the mitigation and minimization of possible risks to which the company is exposed, generally due to its line of business.
What should we consider when designing a compliance system?
A management system evaluates internal and external risks of the company and contrasts them with the application of legal provisions hand in hand with the general principles of good corporate governance practices. Based on these inputs, there are six key words that will help the development of a good comprehensive compliance system: establish, develop, implement, evaluate, maintain, and improve. Taking the above into account, how do we create the compliance system?
- All those activities must be established and identified in which, because of their execution, they must comply with regulatory provisions that, if not complied with, generate contingencies for the company.
- Once the potential risks to which the company is exposed have been determined, the following should be carried out:
- Define the actions and determine the necessary policies and procedures to reduce the risks of non-compliance with regulations.
- Determine a continuous training program for personnel, to provide them with the necessary tools for the prevention and early identification of risks.
- Determine a disciplinary system that establishes sanctions in the event of any non-compliance with company regulations and procedures.
- Define periodic reviews to evaluate the results of the implementation of the compliance policy.
- Based on the results of the periodic review, determine continuous improvement plans to strengthen risk mitigation.
Having a comprehensive compliance system in place will substantially reduce uncertainty in commercial transactions, generating confidence in the institutions and, consequently, a more robust positioning in the market.