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Recently, awareness of "compliance" issues has been rising everywhere. This article will briefly explain what a compliance violation is, why compliance is considered important, what kind of impact and risk a company faces due to a compliance violation, and the problems that may be the cause. It will also introduce examples of violations that may occur in your everyday life and measures that companies should take.
What is compliance?
“Compliance” literally means “compliance with laws and regulations”.Originally, the scope of compliance was limited to "laws and regulations," but in recent years, the scope has expanded to include corporate and social norms.Along with this, the target of "compliance violations" is not only "legal violations" such as window dressing and fraudulent loans, but also corporate attitudes toward employees and inappropriate behavior of employees on the Internet. It's been a lot.
The Background to the Emphasis on Compliance
In recent years, there are multiple factors behind the demand for a high level of compliance from companies. A series of corporate scandals from the 1990s to the 2000s were widely covered by the media, and the emergence of many global companies at that time drew attention to the scale of corporate social responsibility. Masu.
The recent spread of SNS has also had a major impact.The hurdles for whistleblowing have been lowered, making it easier for companies to find compliance violations, and the damage that companies suffer when inappropriate remarks come under fire has increased.
Impact and risks of non-compliance
In today's climate of strong demand for compliance, public opinion against non-compliance is severe, leading to major damage such as loss of trust in companies.Examples of impacts and risks that non-compliance can pose include:
Liability risk
For example, if a compliance violation such as an information leak causes damage to a customer, the victim may be held liable for damages.If the amount of compensation is large enough to affect the company's management, the company may suffer a large loss, be forced into bankruptcy, or be forced to compensate for the damage to its shareholders. I would like to know the risk of administrative punishment such as "business suspension order" and "business improvement order", and the case that develops into a criminal case if it is a clear violation of laws and regulations.
Risk of loss of social credibility
If a compliance violation occurs, the image of a company that prioritizes its own profits without complying with laws and regulations will spread, and the credibility of the company will be lost.Once lost, it takes time to regain trust, and the loss of customers due to a decline in brand power will inevitably lead to a deterioration in business conditions and an impact on employee salaries.
Employee turnover risk
For companies whose image and performance have deteriorated due to compliance violations, it is inevitable that human resources will be lost.Not only will excellent employees leave the company, but it will also become difficult to secure new human resources.
Causes of non-compliance
It is said that compliance violations are likely to occur when multiple situations and timings are met.We will explain the causes of compliance violations, such as the corporate environment and lack of countermeasures.
Insufficient compliance knowledge and lack of morals
Lack of knowledge about compliance leads to unintentional violations.First of all, it is necessary to acquire the correct knowledge from management and employees in the management department, even in the sense that it is well known to employees.However, even if you have little knowledge of compliance, if you have morals based on general social norms, it will be a deterrent to crimes such as stealing information.Regular reviews and updates of basic knowledge and morals are required.
There is a problem with the corporate culture
If there is an organizational culture of ignoring or hiding compliance violations when they are discovered, it is a problem not only for individual employees, but for the company as a whole.Be careful when unreasonable quotas or goals are set.It increases the possibility of committing fraud while knowing that it is a compliance violation.
There is no compliance regulation or consultation desk in the company
Compliance violations can be prevented if a management system is in place within the company.There is an urgent need to create internal regulations and set up a contact point where employees can consult.It is also important to hold regular in-house training and in-house study sessions to raise employee awareness of compliance.
Examples of compliance violations that may occur in the company
We will introduce the general contents of the main types and cases of compliance violations that can occur in companies on a daily basis.Know the specific examples of compliance violations that are familiar to you, the backgrounds and factors that lead to their occurrence, and understand the risks that apply to your company.
Leakage of personal or confidential information
Of course, it is a violation of compliance for employees to intentionally leak data such as personal information and confidential information.In addition, there are many cases of unintentional information leakage.It is important to be aware that important information that is lost in casual conversations, such as chatting with superiors and colleagues while out and about, or talking on the phone with business partners, can be leaked to people outside the company who are present at the time.
Misconduct such as embezzlement
Fraudulent accounting and embezzlement are serious compliance violations subject to criminal penalties.In addition, there are other actions that are not directly related to money, such as taking home equipment and stationery that employees use on a daily basis without permission, selling them for profit, and using company cars for personal purposes. However, there are many possibilities for embezzlement and theft in the course of business.
Long working hours and unpaid overtime
It is also a violation of compliance if overtime work exceeding the upper limit of "45 hours a month, 360 hours a year" stipulated by the Labor Standards Act is a habit.Inappropriate working conditions, such as unpaid overtime, lose social credibility and are accompanied by major risks such as employee death from overwork.
Harassment such as sexual harassment and power harassment
Harassment such as sexual harassment, power harassment, and moral harassment are also acts that go against social rules and ethics and lead to compliance violations.Harassment is often misunderstood as a part of appropriate guidance and communication without the perpetrator's awareness of the perpetrator.
Measures to be taken by companies to ensure compliance
It is extremely difficult to regain the trust of a company after a compliance violation has occurred.It is important to take measures before problems occur.Here are some specific measures that businesses need to take.
Understand the risks your company faces
From the examples of compliance violations above, it is necessary to first understand the risks to which your company may fall.Appropriate compliance is business-specific and wide-ranging.Since it is assumed in every scene of daily work, let's identify and visualize the possibilities while interviewing employees in various departments.
Building an internal compliance management system
Once you have grasped the compliance violations that may occur in your company, the next step is to create internal rules and build a management system.Don't rely solely on the decency of your employees, systematize the regulations and put in place a management system as a sustainable rule.In addition to clarifying details such as how to access confidential data, it is also important to develop labor management rules.
Implementation of in-house training and establishment of a consultation desk
Once the direction of the company is decided, it is necessary to inform all employees so that they can take it as their own.It is effective to conduct regular in-house training and study sessions, thoroughly educate employees, and raise awareness of compliance.It is also important to establish departments and contact points where employees can report and consult.
Establishment of a “forensic investigation” system
Forensic investigations conducted when incidents such as internal fraud or information leaks occur are also effective in preventing compliance violations.By appealing to the company that the forensic investigation system is in place on a regular basis, it will lead to the deterrence of compliance violations.
[Related article] What is a forensic investigation?Commentary on necessary cases, points to note, and examples
Prompt response is key in the event of a compliance violation
Even if countermeasures are taken, compliance violations are lurking around the corner.The key to preventing secondary damage is how quickly and appropriately you can respond when an accident occurs.Compliance violations require a wide range of high-level knowledge, so it is difficult to cover them all.When investigations such as information leaks and labor-related compliance violations become necessary, it is wise to ask a specialized vendor.If a forensic investigation is carried out by the vendor, it will be possible to quickly implement an initial response, efficiently investigate signs of abnormalities and fraud, and confirm the facts, which will lead to early clarification of the situation.
FRONTEO has been a pioneer in forensic investigations in Japan since its founding in 2003.As a leading company with an overwhelming track record in the field of compliance violations, we have contributed to solving the problems of many companies with high reliability.With the spread of the Internet and SNS, the demand for digital forensics investigations is increasing due to the increased handling of digital data. .We predict and grasp possible incidents in a wide range of fields, and propose effective and cost-effective investigations for all issues.
The possibility of compliance violations exists within every company, and there is a risk that a wrong response could cause serious damage over a long period of time.Before a problem occurs, consult FRONTEO and make the necessary preparations for your company.
