Strengthening Digital Governance with Compliance

Compliance and corporate governance have evolved into key practices that organizations must adopt in their operations. The steady demand for digitalisation in business is one of the key drivers for these practices.

Now that products and services are brought to digital platforms, organizations are not only expected to innovate and mitigate risks. They must also follow the latest standards and implement efficient governance to secure their data and operations, remain competitive, and inherently maintain the trust of their stakeholders.

In the following discussion, we deep dive into regulatory compliance and corporate governance respectively, then see how organizations can use digitalization to execute these practices.

What is regulatory compliance?

Regulatory compliance demonstrates how companies adhere to laws and standards. These regulations cover various aspects of the institution’s operation, including finance, health, and security.

For instance, the General Data Protection Regulation (GDPR) implemented by the European Union (EU), is one of the most prominent laws protecting the privacy and security of personal data, followed by organizations worldwide that process data from anyone in the EU. By securing compliance with regulations such as GDPR, companies can protect their consumers, continuity of operations, and reputation.

In Asia, consumer data is also recognized as a profuse resource that companies must manage securely and carefully. This, along with the continuous shift of customer transactions to digital, led to the creation of various compliance laws, especially in data protection. The lack of an all-encompassing data compliance regulation in Asia brings the challenge to providers to keep track of these policies and their compliance if they want to maintain customer trust. With compliance in mind, organizations can devise a strategy that puts the rights of stakeholders — especially the customers — at the forefront.

Externally, compliance speaks volumes, meaning organizations can subject themselves to frequent reviews and examinations and provide the assurance needed by their prospects and consumers. Moreover, non-compliance with laws and regulations results in penalties and reputational damage. Instead of a bane, companies should view compliance as leverage since people will trust providers that can protect their data and can ensure operation against threats and breaches.

What is corporate governance?

Corporate governance highlights the duty of the board to determine the company’s direction. It covers the rules and practices implemented by the decision-makers based on the organization’s values and goals. It elevates leadership as a responsibility that entails not only directing but also guaranteeing transparency, accountability, and security to stakeholders.

Similar to the practice of regulatory compliance, governance also involves implementing policy and committing to standards. However, monitoring and corrective measures are handled internally. With governance, the expected result is not only to avoid penalties and scrutiny but to steer the company on the right, profitable path and strengthen the human element in leadership. This type of governance looks after the wellness of all stakeholders.

As compliance regulations like GDPR are designed to protect the rights and interests of these groups, governance can use them to strategize and execute policies that will benefit the stakeholders.

How Boards can Strengthen Modern Governance through Compliance

By understanding compliance and governance separately, we can now see how these two practices can inform each other to establish a company workflow that follows laws and regulations and efficiently fulfills the demands of its stakeholders.

Compliance might initially seem like a short-term endeavor. However, with the right priorities and goals set through governance, compliance becomes a strategy instead of a tedious task of ticking boxes and passing audits. After all, governance determines how compliance can be maximized as a window for opportunities, and compliance can ‌advise what aspects of governance and operations should be improved for sustainable growth.

To illustrate, organizations can reassure stakeholders that their processes maintain a responsible business by responding to the tighter monitoring of fulfilling their Environment, Social and Governance (ESG) commitments, and eliminating the gap between what they commit to their ESG reports and what they practice. In this way, ESG reporting serves more than as a compliance requirement by facilitating governance that embeds ESG values into its policies.

Compliance is also beneficial internally, as it promotes a culture of innovation and regular audits in the long term. By conducting internal and external audits, companies can review the existing measures to comply with standards. It readily provides a reference to the board if the measures remain effective or if they should be adjusted. For latter cases, innovation is encouraged so resources, procedures, and internal structures can respond to the latest standards.

With the impact of regulations on a company’s operation and reputation, top management must step up and implement effective compliance and governance from the top down. Below are some essential actions that integrate these two practices:

• Identify applicable regulations and corresponding requirements since various standards exist per region, industry, etc.
• Create a compliance framework, considering the risks identified if compliance is not met.
• Efficiently communicate corrective and control measures for compliance at all levels.
• Ensure proper and readily available documentation that can respond to stringent compliance requirements.
• Strengthen the oversight function of the board to monitor how policies, strategies, risks, and management performance respond to regulations.
• Monitor updates to regulations since they also evolve and adjust the company’s procedure accordingly.

Utilizing Digital Tools for Compliance and Governance

Digital transformation stimulated companies to bring their products and services to digital and online platforms. This also enabled accessibility and collaboration within hybrid workplaces in the post-pandemic era. To fully use these advances, companies should extend digitalization to facilitate their compliance and governance practices.

Board technology, like Convene, supports the workflow and decision-making processes by providing a single platform for communication and collaboration. This is especially helpful when compliance regulations are revised after some period, and governance must adapt by introducing new strategies, policies, and procedures.Moreover, compliance is an intricate process that requires accurate information and documentation. Governance similarly entails accessing data in fulfilling the board’s oversight function. Convene assists by providing an efficient repository to secure all organizational and compliance data in one place.

To successfully integrate sound compliance and governance into the organization’s strategy and performance, decisions and actions must also be traced and accounted to specific people. Thus, audit trails and reports should be readily available for review and investigation.

See how Convene can empower your compliance and governance efforts through digitalization.