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As government regulations and industry standards become increasingly stringent, many firms — particularly professional services firms — are under pressure to ensure they are operating in a compliant and legal manner. Failure to adhere to these regulations and requirements can have serious consequences for the company, including hefty fines, negative public perception, legal action and business disruption.
Historically, compliance and risk management were a manual process where teams meticulously tracked, updated and verified compliance metrics and standards. Unfortunately, the margin for human error is enormous and could leave the company open to significant risk. The solution lies in workflow automation systems. By leveraging automated systems to track, monitor and complete regulatory and compliance tasks, companies can improve their ability to remain in line with the current standards.
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1. Process standardization
Manual processes are one of the leading causes of regulatory and industry compliance failure. This is especially true for companies that have numerous employees performing different tasks in slightly different ways. Implementing an automated workflow process enforces consistency and uniformity by standardizing processes across the organization. With each task being performed within the bounds of the workflow systems, the company has more control over team members who may cut corners or deviate from the complaint process.
2. Reduction of human error
In many cases, compliance and regulatory violations aren’t intentional or malicious. Even the most diligent employees can make mistakes from time to time. Unfortunately, when it comes to compliance, even small, innocent errors can come with outsized consequences including large fines or legal action. Automation can reduce the risk of human error by taking over routine and repetitive tasks, like data entry, that are prone to manual mistakes.
3. Regulatory updates and alerts
Regulatory requirements are constantly changing. Nearly two-thirds of business owners admit that they struggle with keeping up with compliance regulations. It can be challenging to track and implement these changes, leaving the organization out of compliance. Industry-specific workflow automation systems can be programmed to automatically integrate regulatory updates as they become available. For example, tax accountant firms typically use software that updates to the latest forms available from the IRS.
These tools can also provide real-time monitoring of potential compliance issues and provide system alerts. This allows for compliance issues to be addressed before they snowball into a major problem, ultimately avoiding a fine or other consequence.
Related: 3 Ways Businesses Are Staying Ahead of Regulatory Changes in 2024
4. Audit protection
Highly regulated businesses are often required to maintain a robust repository of important documents such as permits, financial records, employment contracts, regulatory filings and other legal agreements. The mismanagement of these important documents can lead to serious consequences if they are lost or inaccessible during an audit.
Automated workflow systems can streamline document management by organizing, storying and archiving all necessary documents in a systematic way. The best part is that digital documents can be backed up and aren’t at risk of permanent loss in the event of a flood or fire.
5. Compliance reporting
In many cases, companies are required to submit or publish documentation to regulatory agencies or to the public. This can be a very time-consuming process. In addition to storing important documents, automated workflow tools can also leverage system data to help generate these reports instead of completing them manually. This can reduce the risk of inaccurate or incomplete reports being filed with regulatory agencies.
6. Data security compliance
One of the fastest-growing areas of compliance is data security, especially with the advancement of tools such as artificial intelligence. Numerous governments and agencies across the globe have developed standards and requirements around how sensitive and private information should be stored and handled, particularly regulations like GDPR and HIPAA. Manual processes and human handling can expose data to unauthorized access or breaches, leading to compliance violations.
Most automated workflow platforms come equipped with the latest built-in security features such as encryption, user authentication and access controls to help safeguard sensitive data and comply with data protection regulations.
Related: The 5-Step Guide to Navigating Legal and Regulatory Changes in Business
Workflow automation systems are transforming the way businesses manage risk and compliance. The downside is that governments and regulators understand the power of these systems, which may encourage additional complex regulations in the future. It’s critical for organizations to start implementing these systems so they can remain ahead of this curve. As regulations continue to evolve, leveraging automation will be the key to protecting your business against any regulatory or compliance risks.