What is compliance risk?

Compliance risk is the risk to the financial condition and resilience of an organization, which can arise from violations of regulations or laws, as well as from the failure to conform with required practices, internal policies and processes, or ethical standards. Compliance risk can happen within third-party relationships when the third party’s operations are inconsistent with the applicable laws, regulations, ethical standards, or the organization’s policies and procedures.

Why is it important for my organization to build resilience against compliance risk?

Managing compliance risks is a critical part of any third-party risk management (TPRM) program, and often, third-party relationships can be the weakest link in a company’s compliance program. Third- and Nth-party violations of regulations such as the Foreign Corrupt Practices Act (FCPA) (link to ABAC glossary subpage) can result in millions and even billions of dollars in fines

In recent years, regulators have become increasingly focused on how companies manage their third-party and outsourcing risks. The Department of Justice, for example, updated their Evaluation of Corporate Compliance Programs in June of 2020 to stipulate that corporate compliance programs must be adequately resourced and empowered. Despite this, a recent industry survey reported that a third of respondents stated that they did not consider that their program had adequate funding for improvements needed to ensure success.

Reputational risk is also a consequence of compliance violations and companies can see negative impacts on their visibility and bottom line.

How can Aravo assist me in mitigating against compliance risk?

Aravo offers a host of capabilities within our TPRM solutions to help companies build resilience and manage compliance-based risks through compliance risk assessments, screening capabilities, integration with risk intelligence providers, ongoing due-diligence, reporting, and audit trails that record all activities.:

ABAC Compliance: Aravo for ABAC Compliance helps organizations build a risk-based, automated approach to third-party ABAC compliance. It enables ongoing due diligence while providing a robust audit trail and system of record, both of which are required to defend and protect your organization. Key features of Aravo’s ABAC Compliance application include:

• Collection of firmographic and high-level risk data with domain-specific intake questions
• Screening of third parties against restricted or embargoed parties’ lists
• ABAC assessment scope that is aligned to international guidance and regulation for risk-based due diligence
• Application of controls to third-party gifts and entertainment in line with policies
• Provision of ongoing monitoring of third-party risks

GDPR Compliance: Aravo’s GDPR Compliance solution is a cloud-based application that is designed for organizations looking to ensure that their third-party data processors are operating in compliance with the General Data Protection Regulation (GDPR). This program helps companies:

• Identify third-party processors that fall within scope of GDPR
• Ensure that the correct controls for data processing, management, security and breach reporting are in place
• Reduce their risk exposure
• Create a framework for routine and incident reporting, consistent with regulatory requirements

Customer Defined Assessments: Organizations may have their own propriety assessments that align with their business requirements and have been approved by compliance and senior management. Aravo’s cloud-based third-party risk management application is agile enough to incorporate organizations’ own proprietary compliance risk assessments, together with supporting workflows. Aravo also makes it easy to expand on, rationalize, and update these as business and regulatory conditions change.

Share with Your Friends: