Businesses are now dealing with more regulations than ever. As the Code of Federal Regulations continues to grow, it’s important to make sure that your business is compliant with all applicable regulations. Especially important are those involving data protection, sharing and storage. In many industries this can be a daunting task that calls for professional assistance.
Regulatory compliance is both an ethical and practical issue for your business. Regulations put in place to protect consumers offer businesses the opportunity to put their ethical culture on display. Most regulations also carry some kind of penalty in the event of a breach. These can range from modest fines to jail time.
In order to guarantee your ability to achieve full regulatory compliance, it’s important to be aware of how regulations change the way your business operates and the consequences of failing to comply.
Consequences of Regulatory Compliance Breaches
The true impact of a compliance breach can be hard to quantify, but the monetary penalties associated with regulatory compliance breaches are a good starting point. Fines are meant to be a deterrent as well as a punishment, and are therefore designed to be able to have a major effect on a business’s bottom line. HIPAA violations carry clear financial penalties in the healthcare sector, for example. A Category 1 violation carries a $100 minimum fine, with a ceiling of $50,000. A Category 4 violation carries a $50,000 minimum fine, with a ceiling at $1.5 million.
As the severity and number of violations increases, fines can skyrocket. Fines can also vary wildly by industry. The largest fine ever levied for an environmental violation, for example, was against BP for the 2010 Deepwater Horizon spill: $18.7 billion.
In the post-Enron era, governments throughout North America and Europe have taken major steps to prevent future corporate corruption. There has been a surge in regulations affecting every branch of a business. Knowledge of these regulations and their penalties will protect your business in the future – and possibly change the way you operate.
The Constantly Changing World of Regulatory Compliance
Part of running a growing business is preparing to change the way you operate to comply with new regulations. In some industries, sweeping regulations and policy changes mean that decision-makers have to stay on their toes. Two industries in particular come to mind: healthcare and finance.
The Affordable Care Act was rolled out over several years and made significant changes in the healthcare sector, particularly regarding insurance processes and plan administration. As healthcare professionals adjusted and grew accustomed to these changes, shifts in the political landscape made it clear that things could change again very quickly. It’s impossible to tell what the regulatory scene will look like for the healthcare sector in two years.
After the Enron scandal, legislation like the Sarbanes-Oxley Act introduced sweeping regulations for American businesses, particularly in the financial sector. Responsible recordkeeping and financial reporting has never been so important. This goes doubly for businesses working with large amounts of other people’s money.
In some cases, organizations in these industries are able to hire a full-time compliance staff. For small to medium-sized businesses, hiring a dedicated compliance team may not be feasible. In cases like these, working with an outside compliance expert may be the best course of action.
Certain managed service providers like Diverge IT are uniquely equipped to help businesses address and resolve regulatory compliance issues. If you have concerns about your current level of compliance or want an extra level of assurance, we’d love to discuss what our team can do for you. Feel free to get in touch – peace of mind could be just a phone call away.