Business leaders generally see digital transformation as the medium to grow business, streamline operation, and better customer relations. This automatically makes R&D, sales, and supply chain, etc. the functions that directly affect profit and loss and capture the essence of digital transformation ROI. This results in the compliance domain becoming the last to get transformed.
But with organizations broadening their digital transformation efforts with emerging technologies and connected devices, their risk vulnerability changes with a greater risk of new cyber threats. And a lack of consistency among enterprise security initiatives only worsens these risks – an event that can be avoided by merging digital transformation and compliance.
In this article, we are going to discuss the need of adding digital transformation for the risk and compliance in addition to diving into the many compliance challenges that a business faces, plus the ways to boost the compliance management plan in the global enterprise governance market.
Table of Content
- What is Enterprise Compliance?
- Benefits Of Enterprise Compliance Digital Transformation
- Digital Transformation Challenges in Compliance
- Ways to Encounter Digital Transformation Challenges in Audits and Compliances
What is Enterprise Compliance?
Enterprise compliance spans around various businesses, organization units, and nations. In the digital transformation era, it is increasingly becoming a business goal for organizations to act ethically and keep the compliance risks in control. When you look into full-spectrum compliance, you will find it to be made up of three core components: environment, execution, and evaluation.
All three components showcase the effects of digital transformation on internal audit and compliance.
Benefits Of Enterprise Compliance Digital Transformation
The impact of digital technologies on internal audit expands beyond businesses achieving a safe space on the legal platform. It ripples down to improved operations, effective alignment of insights, and business strategy, amongst other spaces. Let us look into the benefits of digital transformation and internal audit and compliances in some detail.
Lowered legal problems
The biggest effect of constant compliance adherence lies in decreased risk of fines, penalty, work stoppage, and lawsuits. Inability to meet compliance requirements, in suppose advertising methods or manufacturing procedures, can open your business to several expensive lawsuits.
Following compliances can make handling business operations efficient. Take for example HIPAA or GDPR compliance – they are designed to make digital interactions secure for all the involved parties through several data and software related guidelines.
Better public relations
By keeping yourself updated with the compliances, you get the opportunity to tout them on your websites and marketing collaterals – something that can be a great publicity opportunity. For example, you can mention that your website is GDPR compliant or the payment system that you are using follows PCI guidelines.
Better insights and business strategy alignment
In a business, one can only manage what they can measure. A compliance management plan can help gain a better understanding of your business by giving your leader the information they need to directing and controlling your operations.
The analysis of a compliance plan can help reveal the hidden insights into your business while giving you the chance to put the actions in place for improving management and overall business efficiency.
These were the several benefits attached with internal audit digital transformation that the many experienced digital transformation consulting companies swear upon. We however cannot ignore the challenges of digital transformation in compliance and audits.
Digital Transformation Challenges in Compliance
When people come to us looking for digital transformation consulting services, the biggest issue that tops their list is how to make their compliance plan adoption and transformation friendly. However, the list of issues that digital transformation companies have to work around to make enterprises’ compliances transformation friendly doesn’t just end there.
1. Keeping up to date with regulatory changes
Business regulations are constantly changing. Several new regulations come up to help businesses and industries keep up with changing users’ trends and requirements. It can be very challenging for businesses to keep up with the compliances and ensuring that they are comprehensively met.
Think of the 2018 General Data Protection Regulation (GDPR) compliance. While at the first glance, it was an EU-centric regulation, but its effect was far-reaching as it impacted all the businesses who were processing EU citizens’ data. The regulation, which did not exist before 2018 brought a major change for businesses asking them to relook at their strategy for implementing the compliance requirements.
2. Exhibiting constant accountability and transparency
Accountability and transparency are the keys to several compliance requirements which include regulation compliance like the GDPR, industry-specific rules like PCI, and HIPAA or certification compliances like ISO27001. These compliances require businesses to show consistent transparency and accountability. To ensure this, businesses would have to have working systems in place in addition to methods around reporting, monitoring, and managing business processes.
3. Constant advancements in technology
Advancements in technology – and the openness they bring to the table – can make following compliances a little difficult. For example, advancements like BYOD, IoT, and integration of APIs and third-party apps although beneficial for businesses can be difficult to manage on the grounds of security and thus can impact compliance adherence.
Additionally, as technologies evolve, businesses have to relook at their legacy system modernization needs, ensuring that their outdated systems are either replaced or modified.
4. Growing instance of cyberattacks
In the current hyper-connected world, businesses are processing a high amount of sensitive data constantly. With business environments becoming overly multifaceted and complex, it is becoming challenging for businesses to ensure data protection for managing compliances and mitigating the risks.
This has brought a sharp rise in the rate of cyberattacks across the globe. In such a scenario, businesses have the added responsibility to protect the data which they process not just for the sake of compliance but also for protecting their customers.
Ways to Encounter Digital Transformation Challenges in Audits and Compliances
1. Build adaptable foundations
The primary act of adding digital transformation in compliance management should be to understand the present-day regulations and find the best framework and standard for data protection and management. While you work on the frameworks, ensure that they are flexible in a way that new changes can be mapped into them while keeping disruption to a minimum.
Another point to note is that it is always well-advised to meet the technological changes. Revisit your legacy system, see if they are meeting your current business needs. If found to be invalid, think of technology adoption that would fit in the current market need and security infrastructure.
The crux, when building an adaptable compliance management foundation is to develop a process and system that is scalable in nature and has scope for new technological adoptions.
2. Due diligence on third-party service providers
Compliance does not work in isolation, meaning it can’t be designed to keep the internal business processes at the center. You should ensure that the compliance culture is carried in the third-party providers’ relations as well so that the potential vulnerability can be mitigated.
You should ensure that the due diligence which they follow is at a level that is acceptable by your organization.
3. Make data protection a priority
Cyberattacks are one of the biggest concerns for businesses, across sectors. At every stage, you should promote data-driven protection with an additional layer of security approach addressing as many concerns as possible. You should have a process in place highlighting who can manage what, when, and how.
Moreover, you should have a disaster recovery plan which coordinates effective recovery plans through delegation of data protection duty to internal stakeholders. Doing this will ensure that you have identified all the problem areas and have a plan to rectify problems.
4. Implement and monitor compliance policies
A crucial part of compliance management is ensuring that the policies and controls are enforced.
There should be an efficient management reporting system in place which would ensure that the compliance guidelines are followed by your organization at all times. You can also think of incorporating technologies that would help your business to identify issues and address them in real-time to mitigate risks.
Aligning compliance management with the fast-paced digital transformation needs is difficult for enterprises to manage on their own. It would take them to partner with someone who operates around current market trends to help them remain updated on what’s new and how the industry is moving in terms of regulations.
We are one of the digital transformation consulting firms that have helped several enterprises like you take hold of their compliance needs. Get in touch with our team to create a roadmap of how to go about this crucial digital transformation aspect.