The risks associated with not meeting compliance will only increase. Unfortunately, many organizations look at compliance as a business cost as opposed to an investment. Meeting compliance seems to parallel an improvement in efficiency and data privacy. As a result, companies must invest in IT compliance services as many compliance teams are under-staffed if a compliance team is present. There is truth to the idea that if you need compliance but don’t invest in it, you will see that you have paid for it and don’t have it.
Invariably, suppose you don’t incorporate cyber security services. In that case, you will find that you will pay dearly through reputational loss, decreased consumer trust leading to a decrease in sales, and hefty penalties.
What are the risks of not being compliant with IT?
Massive penalties and fines
There are penalties in a wide variety of forms: Limits placed on business activities, barriers to approval, monetary fines, and in the worst cases, incarceration. Even if you have not warranted a penalty, your organization might still get a government-based investigation costing your firm countless legal and contractor fees as well as delays on your business operations. For instance, South Korea fined BMW 10M Euros because it did not comply with the country’s recall regulations, nor did it notify their government soon enough about a product recall.
To mitigate your risk of a fine or a penalty, you should consider SSI’s IT compliance services, focusing on deploying a robust compliance framework complete with documentation, audit trails, tracking, and monitoring your infrastructure.
In the mid-90s, many global corporations were caught producing their clothing and shoes in sweatshops that utilized child labor. Some of the companies included familiar names such as Nike and The Gap. Since then, these companies have significantly improved their global supply chains. However, at the time, the media frenzy caused a significant reputational loss. Further, many companies still do not include auditing technologies in their supply chain system infrastructure. Unfortunately, many apparel companies still use sweatshops under the radar — it doesn’t seem to make headline news as much as it once did.
In 2013, apparel company Joe Fresh came under fire when their garment factory in Bangladesh collapsed, killing 1,127 people. Their parent company, Loblaws, agreed to pay their workers three months’ salary plus an undisclosed amount of long-term compensation. A $1.85B class-action lawsuit was filed against Loblaws seeking compensation associated with damages incurred at the Rana Plaza in Bangladesh.
Implementing IT compliance services into your supply chain infrastructure should be a priority before any scandal hits.
Product and cycle time delays
One of the most financially damaging events a company faces is having their products blocked at the border, forced to issue a recall, or forced to destroy merchandise due to compliance issues.
One of the most damaging outcomes of not being compliant with IT is when a company’s products are blocked at a country’s border. For example, if your company made specialty holiday cakes, it would not bode well if your shipments were stopped by a country that celebrates said holidays. Perhaps you sell rum cakes, and it was discovered the country’s policies do not allow anything over 0.5% alcohol, but your rum cakes contained 0.6% alcohol and held it up. How much in lost sales and production would that cost? Had there been IT compliance services incorporated beforehand, then maybe you would have caught the miscalculation before it was too late or before millions of dollars went down the drain.
Loss of the business
In some cases, governments can regulate a company out of business. Due to regulations, cigarettes are not as popular as they once were. E-cigarettes touted as the healthier alternative to cigarettes, are now facing strict rules worldwide, making it more difficult to sell and buy. California, a state known for its many regulations, banned non-rescue animals in pet stores. When public opinion turns, regulations usually follow the trend. Businesses are not immune to strong laws once their products and services are out of favor with the public at large.
The solution: IT compliance services
The good news is you can use technology-driven solutions to protect your organization from non-compliance with IT. Compliance guidelines are ever-increasing, and this will continue. Without the right systems in place, your company may be violating rules without your knowledge and face penalties or even closure. With IT compliance services, you will have compliance monitoring to remain proactive within any regulatory environment.
Besides, the tech-driven approach helps to:
- Reduce business risk
- Facilitate global expansion
- Improve control and transparency
- Provide real-time alerts
- Enable proactive plans to eliminate the risk
- Add agility to your compliance procedures
Ignorance is not a defense. The regulatory environment will continue to grow, and companies must remain vigilant and proactive to prevent any penalties, reputational loss, or business closure.
Figuring out what applications to use to create a robust compliance infrastructure is difficult and expensive. On the other hand, a lack of IT compliance services is even more costly. Your business is operating in a complex and ever-changing marketplace. To retain a competitive advantage, you must ensure continuous compliance. The best way to do this is by deploying IT compliance services. Contact SSI today to discuss how we can create a dynamic compliance infrastructure for your organization.